HDFC Bank's Chairman Atanu Chakraborty on July 17 said the Indian economy is expected to recover from the COVID impact aided by the progress in the vaccination programme. "As, number of active cases come down and vaccination gathers pace, we estimate India’s economy to grow at a fair clip in near and medium term," Atanu Chakraborty said at the bank's annual general meeting (AGM) on 17 July.
This is Chakraborty's first AGM as HDFC Bank Chairman. In April this year, the RBI approved the appointment of Chakraborty as the new Chairman of the bank. The appointment is for a period of three years and follows the exit of previous chairperson, Shyamala Gopinath in December last year. Chakraborty is a 1985 batch IAS officer from the Gujarat cadre.
HDFC Bank has seen major changes at the top last year. Aditya Puri, the managing director of the bank for the last 26 years, retired in October handing over the baton to Sashidhar Jagdishan for the top job at the bank. Along with this, there have been a series of changes at the top level.
Pandemic impact
Chakraborty said the economy was hit by multiple waves of the pandemic that has induced a general risk- aversion. "That has translated into lower discretionary spending by people, at large. This coupled with mobility restrictions has impacted the aggregate demand, which is quite unlike regular boom and bust cycles," Chakraborty said.
Chakraborty said the bank has created a new business segment of commercial (MSME) and rural banking to capture the next wave of growth. "This will not only reinforce the Bank’s top position in the MSME segment but also strengthen efforts to serve customers in both India and Bharat and even consumer segments like the tech savvy and Millennial, going forward," Chakraborty said. The creation of this vertical is under the 'future ready' project of the bank.
The delivery channels will be complemented with digital marketing, even as the bank leverages the branch channel and virtual relationship channel, the Chairman said.
Chakraborty apologised to the bank's customers "for the times when we have not been able to live up to customers’ expectations," and said going ahead the bank's primary goal is serving the customer, "with utmost humility, care and efficiency." This comment assumes significance in the context of bank facing challenges on the technology front. Following multiple digital outages, the RBI had barred the HDFC Bank in December last year from launching new digital products. The ban stays even now.
HDFC Bank, on July 17, reported a 16.1 percent year-on-year growth in standalone profit at Rs 7,729.64 crore for the quarter ended June 2021 despite elevated provisions. Higher other income and pre-provision operating profit along with NII supported profitability. The bank reported a profit of Rs 6,658.62 crore in Q1 FY21.
Net interest income, the difference between interest earned and interest expended, grew by 8.6 percent to Rs 17,009 crore compared to the year-ago quarter, with loan growth of 14.4 percent and a core net interest margin of 4.1 percent. Deposits, at Rs 13.45 lakh crore grew, by 13.2 percent on a year- on-year basis.
Provisions and contingencies for the quarter ended June 2021 were at Rs 4,830.8 crore (including contingent provisions of Rs 600 crore), against Rs 3,891.5 crore for the same quarter last year, and Rs 4,693.7 crore in March quarter 2021.
The total credit cost was at 1.67 percent in June quarter 2021, against 1.64 percent in March 2021 quarter, and 1.54 percent in June 2020 quarter, as the second wave of COVID-19 disrupted business activities for close to two-thirds of the quarter, leading to a decrease in the efficiency in collection efforts, and a higher level of provisions, said HDFC Bank.
Asset quality weakened during the quarter. Gross non-performing assets were at 1.47 percent of gross advances in Q1 FY22, against 1.32 percent in Q4 FY21, and net non-performing assets were at 0.48 percent against 0.40 percent.
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