Growth pace to help HDFC Bank double size every four years: CEO

Jagdishan says merged entity’s capital, asset quality and customer based to propel growth across diverse financial segments; expects to add 1,500 branches a year for some more years

Updated - July 01, 2023 10:32 pm IST

Published - July 01, 2023 10:29 pm IST - MUMBAI 

Having completed what he called “the largest merger in corporate India” between HDFC Ltd. and HDFC Bank Ltd., Sashidhar Jagdishan, Managing Director & Chief Executive Officer of HDFC Bank said due to the potential of the combined entity the bank would be able to double its size every 4 years. 

“The runway for financial services and mortgages, which are so underserved and under penetrated, is going to be very large. HDFC Bank - the combined entity - with a large and growing distribution and customer franchise, more than adequate capital, a healthy asset quality and profitability, will be best positioned to capture growth,” Mr. Jagdishan wrote in a letter to the bank’s employees on Saturday.

“The pace at which we aim to grow - we could be creating a new HDFC Bank every 4 years!,” he added. 

Earlier in the day the bank had intimated stock exchanges about the completion of the formalities of the merger by submitting NCLT approval papers with the Registrar of Companies (RoC).

He said the decision for the merger was spurred by the right timing, both, from an ‘economics’ and a regulatory perspective.  Stating that the bank would harness the bond its erstwhile parent HDFC had with its customers, Mr. Jagdishan said the bank would now leverage the home loan products to grow its customer base.

“The runway for growth is going to be large and for a long time to come,” he said. “The bank with its superior digital platform and digital journeys will have the propensity to upsell to the home loan customer with a complete bouquet of the bank’s and subsidiaries’ products across pay, save, borrow, invest, insure, and trade,” he added. 

“The opportunity to bundle our other products like a savings account for all banking needs, a personal loan for upfront contribution to the builder, a consumer durable loan for purchase of durables for the new home, a life insurance to protect the family in any eventuality, a home insurance to protect against fire and structural damages, a credit card, an SIP along with EMI payments to create wealth, can all be bundled and orchestrated with a single click during this process,” he further said.

“This is going to be a paradigm change of how the bank would be doing its businesses in the future - moving from sales management to relationship management,” the CEO added.

He said the bank would be adding more than 1,500 branches every year for some years and would sharply enhance its technology that would “make us a ‘technology company’ which is into banking!,” he said. 

“But the most important priorities are going to be in the way we conduct ourselves from a governance and compliance perspective, how we can enable a great working environment for our staff and how this can lead to delightful customer service,” he added. 

Welcoming the more than 4,000-strong workforce of HDFC, he said they would be given a fair deal. 

“The leadership team of HDFC Ltd. and I, in several forums, promised that your job and pay will be protected. We have kept that promise,” he said. 

Though July 1 is the effective date of merger, the shares of the combined entity, HDFC Bank Ltd. ,would start trading from July 13, and the shares of HDFC Ltd. would be extinguished. HDFC Bank would issue and allot to eligible shareholders 42 new equity shares of the face value of ₹1 each, credited as fully paid-up, for every 25 equity shares of the face value of ₹2 each fully paid-up held by such shareholder in HDFC Ltd. as on the Record Date i.e., July 13, 2023.

The combined net profit of the entities as on March 31, 2023 was ₹60,348 crore, the net worth was ₹4,14,184 crore while the number of employees was 1,77,239.

Starting early on Saturday, the offices and branches of HDFC were rebranded as HDFC Bank.

The subsidiaries of HDFC Limited, including HDFC Life Insurance Company Limited, HDFC Asset Management Company Limited and HDFC Ergo General Insurance Company Limited have become subsidiaries of HDFC Bank with effect from July 1.

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