Let's hear what Mr Sashidhar Jagdishan has to say in HDFC Bank's FY22 AR.
I personally am very excited about the future of the HDFC group, which is analogous to a bet on the future of India 🇮🇳🚀
A Thread 🧵
I personally am very excited about the future of the HDFC group, which is analogous to a bet on the future of India 🇮🇳🚀
A Thread 🧵
1/ With the period of uncertainty mostly behind us, I believe a more positive macroeconomic outlook dominates the executive agenda, across industries.
2/ India is expected to grow 7.3% and is likely to be the fastest-growing major economy in the world in FY23 with the strength to absorb external shocks.
3/ To enable the infusion of a modern technology platform one needs to lay a very strong foundation and we have done that over the last year, through a series of technology-led initiatives that include
4/ i) Changes at the foundational level
ii) Creating new digital solutions: Have already built 10 new journeys and will be rapidly rolling out new journeys every 3 weeks.
iii) Modernising the core.
ii) Creating new digital solutions: Have already built 10 new journeys and will be rapidly rolling out new journeys every 3 weeks.
iii) Modernising the core.
5/ Created our ‘Enterprise Factory’ wherein the Bank’s tech and digital teams work in a new age start-up-like environment and co-create deep-tech IP capabilities.
6/ A strong bottom-up Net Promoter System (NPS) programme (‘Infinite Smiles’) covers customer interactions across all products/services and delivery channels.
Lead the overall NPS ranking among 20+ competitors in the banking category which was done by a leading consultancy.
Lead the overall NPS ranking among 20+ competitors in the banking category which was done by a leading consultancy.
7/ Investing in an omnichannel customer experience
platform. This will enable our customers to reach out to us through their preferred channel for service i.e., social, email, texts, voice, etc.
platform. This will enable our customers to reach out to us through their preferred channel for service i.e., social, email, texts, voice, etc.
8/ Growth engines —
Retail Assets, Commercial (MSME) and Rural Banking, Corporate Banking, Government and Institutional Banking, Wealth Management, and Payments.
Retail Assets, Commercial (MSME) and Rural Banking, Corporate Banking, Government and Institutional Banking, Wealth Management, and Payments.
9/ Our focus on the MSME sector is paying off, with our Commercial and Rural Banking Group emerging as a strong growth driver (up 30.4%).
We leveraged the opportunity available in the Corporate Banking sector (up 17.4%) without any compromise on our ROA.
We leveraged the opportunity available in the Corporate Banking sector (up 17.4%) without any compromise on our ROA.
10/ We are expanding our wealth management services to more cities and towns (now 700+ towns).
Our Retail Loans continue to grow in the same pristine way (up 15.2%).
Our Retail Loans continue to grow in the same pristine way (up 15.2%).
11/ Why the merger? Home loans are an emotional product and bring with them a host of accelerated benefits for the Bank.
Housing is going to be a huge growth opportunity and one of the key drivers of India’s GDP over the next decade.
Housing is going to be a huge growth opportunity and one of the key drivers of India’s GDP over the next decade.
12/ Further, only 2% of our customers source their home loans through us, while 5% do it from other institutions. The latter is equivalent to the size of our retail book.
13/ Home loan customers typically keep deposits that are 5 to 7 times that of other retail customers.
And about 70% of HDFC Ltd’s customers do not bank with us.
And about 70% of HDFC Ltd’s customers do not bank with us.
14/ The long tenor nature of home loans provides resiliency to the balance sheet.
Home Loans+ Consumer durable loans (One of the largest financiers here): this type of bundling has the potential to increase margins.
Home Loans+ Consumer durable loans (One of the largest financiers here): this type of bundling has the potential to increase margins.
15/ With the advantage of a lower cost of funds and the phenomenal distribution muscle that we have built, it is imperative that we seize this opportunity
16/ The enhanced capital position of the Bank post the merger also means that we can take bigger exposures in leading corporates and power the country’s infrastructure build-out.
17/ Today we have 6,000+ branches across India, and we plan to nearly double our network in the next three to five years by opening 1,500 to 2,000 branches every year.
//Cost to Income should remain elevated.
//Cost to Income should remain elevated.
18/ We believe that the runway is huge, and we can potentially add an HDFC Bank every five years.
A 14-15% cagr is not bad for an entity of their size.
End.
A 14-15% cagr is not bad for an entity of their size.
End.
19/ However, it is sad to not see a single mention of blockchains in the annual report of one of the largest bank of India (Future’s largest)
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