HDFC-HDFC Bank Merger Highlights: Completion of merger process expected by 2nd or 3rd quarter of FY24

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HDFC Bank and HDFC: Then and now - a timeline

HDFC Bank was among the first to receive approval from the Reserve Bank of India (RBI) to set up a private sector bank in 1994.... Read More

Top management of HDFC and HDFC Bankas well as industry experts feel the mega-merger is a win-win for the two organisations, stakeholders, customers and even the economy. However,HDFC’sdepositors and borrowers are bound to have certain doubts regarding the future of their long-term contracts.Here's an explainer on what it means for the depositors and buyers.

In FY96, HDFC Bank's net profit was Rs 20 crore and in FY21 it went up to Rs 31,856 crore. Similarly, HDFC's net profit in FY96 was Rs 196 crore and in FY21 stood at Rs 13,566 crore. Here's a timeline of how both the entities have developed over the years.

HDFC-HDFC Bank merger: The big gets bigger and better

The promoters of HDFC group have done the maths, and it is music to shareholders' ears that despite the regulatory costs, the merger would be earnings accretive for the merged entity HDFC Bank right…... Read More

Saurabh Mukherjea, founder, Marcellus Investment Managers, reacting on what the HDFC-HDFC Bank merger means going forward, said that if one looks at HDFC Bank’s progress in the last three years, the lender’s has been an impressive performance with robust growth in market share and margin improvement, and expects the growth story to go still further. About his outlook when it comes to the bank’s fundamentals, Mukherjea told CNBC-TV18, “I have always said in the last three years that HDFC Bank has been stellar in the way it gained market share. If you add up the gains of the entire private sector banking space and compare that with gains made by HDFC Bank in the last three years, you find HDFC Bank has made significant gains.” Read More

The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of of FY24. HDFC said the Proposed Transaction shall enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base. The merger surprised many as the news was kept under wraps and Twitter had a lot to say. “In my 36 years of investing journey, never seen HDFC Ltd rise by 15% and HDFC Bank by 14% in one single session and that too on the same day. phew!” a banker tweeted. “This merger has been discussed among investors for many years. The timing of it is a real surprise. There was zero leak shows the corporate governance of the HDFC group,” another user tweeted. Read More

Acknowledge that 6-7 years ago we did not see the value on a combined basis. The fastest-growing engine for bank is micro-segment which qualifies for the priority sector, said HDFC MD & CEO, Sashidhar Jagdishan. The interest rate regime has come down and there is no more a drag on reserve requirements, he added.

“The mega-merger between HDFC Ltd into the HDFC bank will enable value unlocking for HDFC bank to build a solid housing loan portfolio and play the housing cycle by enhancing the existing customer base. The merged entity could become the highest weightage single company in the Nifty 50 basket. Further, this merger enables confidence in the Indian economy and looks for a brighter long-term picture beyond the ongoing Russia-Ukraine conflict and the rising inflationary concerns,'' saidNaveen Kulkarni, Chief Investment Officer, Axis Securities.

The party on Dalal Street triggered by the announcement of the merger of HDFC with HDFC Bank could be short-lived given the potential of no entry for HDFC Bank in the MSCI index after the transaction. In an exchange filing on April 4, HDFC announced that it will be merging into HDFC Bank to create one of the largest financial institutions in the country with a likely combined market capitalisation of more than Rs 12.5 lakh crore as of Friday’s closing. The announcement saw shares of both HDFC and HDFC Bank soar over 15 percent at one point before losing a third of those gains at the time of writing. The profit booking seen in HDFC Bank’s stock was likely triggered by a realisation that even after the merger the lender’s stock may not become part of the MSCI indices, which are tracked widely by foreign exchange-traded funds. Read More

HDFC-HDFC Bank merger has been in the news for a while. In fact, back in 2015, HDFC Chairman Deepak Parekh had said his firm could consider a merger with HDFC Bank provided circumstances are in favour. But, the wait for the merger got longer with the parent putting the idea on the backburner saying the regulatory environment is not conducive. Parekh had said that the merger makes sense provided there is no loss of value for shareholders and considering the business synergy between two institutions. But, there is a question on the timing of the merger; why did they choose to do it now? One key reason could be the emerging regulatory approach of the banking regulator to NBFCs. The benefit of continuing as an NBFC is nearly absent now compared with the older times. Read More