Tag: hdfc bank

HDFC Bank unveils organisational changes to power future growth

Banking & Finance

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The country’s largest private sector lender HDFC Bank on Friday unveiled organisational changes under ‘Project Future – Ready’ for its next wave of growth.

“The bank is reorganising itself into three clear areas of Business Verticals, Delivery Channels and Technology/ Digital to further build its execution muscle and be ready for the future,” it said in a statement, adding that the creation of focused business verticals and delivery channels will enable it to capitalise on the opportunities across customer segments in the time to come.

HDFC Bank will re-double its efforts on its business verticals that include corporate banking, retail banking, private banking, government and institutional banking, retail assets and payments as well as commercial banking or the MSME vertical, it further said.

‘Engines of growth’

“We are creating engines of growth with top tier talent backed by technology and digital transformation to capitalise on opportunities that will accrue in the coming time,” said Mr Sashi Jagdishan, MD, HDFC Bank

Kaizad Bharucha, Executive Director, will continue to drive the wholesale bank including corporate banking group, capital and commodities markets group and financial institutions, HDFC Bank said.

Rahul Shukla, Group Head, will now be responsible for commercial banking (MSME) and rural vertical while Rakesh Singh, Group Head – Investment Banking and Private Banking will also be responsible for marketing, retail liability products and managed programmes.

Parag Rao, Group Head – Payments Business, will now drive the technology transformation and digital agenda, the bank said, adding that he will continue to be responsible for the payments vertical. Ramesh Lakshminarayanan, Chief Information Officer and Mr Anjani Rathor, Chief Digital Officer will report to Rao, the bank said.

Ravi Santhanam, CMO, will now be also responsible for driving digital marketing as a stand-alone delivery channel. He will also be additionally responsible for the retail liability products and managed programmes.

Sampath Kumar, Group Head – NRI will now be in charge of all tele-service relationships, including VRM delivery channel of the Bank.

“The role of Credit, Risk, Control and enabling functions continue to be critical as we scale up further in size and reach,” HDFC Bank said, adding that the current leadership would continue in these roles and support in the transformation journey to realise the vision of ‘Project Future Ready’.

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HDFC Bank in talks with FinTechs to upgrade credit card biz, BFSI News, ET BFSI

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HDFC Bank Ltd, India’s biggest private sector lender, is looking to replace its legacy credit card system with a modern technology platform, according to a report.

The bank wants to make the processes more efficient and cost-effective and give customers a better experience and more security.

It is in talks with FinTech firms such as Zeta and Sprinklr for the upgrade.

Zeta, a software service provider for Sodexo’s employee benefits and rewards programme, helps banks to launch modern retail and FinTech products.

HDFC Bank, which has been hit by several digital glitches since the past year, has embarked on a scale changing technology adoption and transformation agenda to help drive its ambitious future growth plans.

RBI ban on credit card issue

The RBI had temporarily barred HDFC Bank in December 2020, from launching new digital banking initiatives and issuing new credit cards after taking a serious note of service outages at the lender over the last two years.

The bank was penalised by the RBI for two major outages, one in November 2018, and the other in December 2019.

Taking a stern view of the repeated outages, RBI Governor Shaktikanta Das had said in December that the regulator had some concerns about certain deficiencies and it was necessary that HDFC Bank strengthens its IT system before expanding further.

Technology transformation

Following this, the bank embarked on a scale changing technology adoption and transformation agenda to help drive future growth plans.

Giving details of the Technology Transformation Agenda, Jagdishan said that the bank has invested heavily in the infrastructure to handle any potential load that it might encounter in the next 3 to 5 years.

“We are also in the process of accelerating our cloud strategy to be on the cutting edge leveraging best in class cloud service providers,” he added.

As part of the agenda, he said, the bank has strengthened the process of monitoring the Data Centre (DC) and has shifted key applications to new DC.

“We have strengthened our firewalls further. We have to be scanning the horizon for potential security issues and be ever prepared to face them. We haven”t had any security issues in the past. But this is always an important area of focus and action plans are underway for further robustness,” the letter said.



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RBI’s CEO tenure cap: Here’s how it will impact Uday Kotak; HDFC Bank, ICICI Bank, Axis Bank safe

Personal Finance

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Analysts believe that this development is marginally negative for Kotak Mahindra Bank, as Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over.

The Reserve Bank of India’s (RBI) final guidelines on the tenure of bank MD, CEOs, or Whole Time Director (WTD) will apply to private lenders, small finance banks (SFBs), and wholly-owned subsidiaries of foreign banks. Under the new guidelines, the post of MD and CEO of a private bank cannot be held by the same individual for more than 15 years in one go. While, in the case of a promoter MD/CEO, the tenure will be capped at 12 years. RBI has noted that under special circumstances and at the discretion of the apex bank, the term for promoter CEO may be extended up to 15 years. “Banks such as HDFC Bank, ICICI Bank, and IndusInd Bank had a change at the helm in the recent past. However, banks like Kotak Mahindra Bank, DCB Bank, City Union Bank, Federal Bank, and RBL Bank have long-running tenures (+10 yrs) of the current MDs,” said Siji Philip and Dnyanada Vaidya, research analysts, Axis Securities.

RBI guidelines negative for Kotak Mahindra Bank

For Kotak Mahindra Bank and City Union Bank, the term extension has already been done till 2024 and 2026, respectively. Analysts believe that this development is marginally negative for Kotak Mahindra Bank, as Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over. However, he will continue to remain a stakeholder in the bank. Uday Kotak got reappointed on January 1, 2021, for a period of three years. “Hence, his tenure will now end on 1 Jan 2024 and he is not eligible for reappointment as he has already completed 15 years as the MD and CEO,” said Suresh Ganapathy, analyst at Macquarie Research in a note.

Banks to comply with RBI guidelines by Oct 1, 2021

Ganapathy also said that the second in line Dipak Gupta (current Joint MD) may not be eligible to succeed Kotak as the CEO as the 15 year cap applies for all whole-time directors (WTD) on the board. RBI circular also stated that the upper age limit for MD and CEO and WTDs in the private sector banks would continue and no person can continue as MD and CEO or WTD beyond the age of 70 years. Banks are permitted to comply with these instructions latest by October 01, 2021. It should be noted that banks with MD and CEOs or WTDs who have already completed 12 or 15 years as MD and CEO or WTD, on the mentioned date these instructions coming to effect, shall be allowed to complete their current term as already approved by the Reserve Bank.

Kotak Mahindra Bank shares were trading nearly 3 per cent higher at Rs 1,799 apiece on BSE in intraday deals on Wednesday. So far, a total of 46,000 shares have traded on BSE, while a total of 19.40 lakh shares have exchanged hands on NSE. RBI also clarified that the individual will be eligible for re-appointment as MD and CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions. “During this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly,” RBI said.

HDFC Bank, ICICI Bank, Axis Bank seem fine

According to Ganapathy, the CEOs of HDFC Bank, ICICI Bank and Axis Bank have plenty of time and can be the CEO for more than a decade as they were appointed as the CEO recently. HDFC Bank CEO took charge last year whereas ICICI Bank CEO took charge a couple of years ago. Similarly, Axis CEO also can be the CEO for more than a decade.

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SBI Cards Q4 spends point to a worsening Covid impact, BFSI News, ET BFSI

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SBI Cards and Payment Services Ltd’s showing a slowdown in business in the fourth quarter, when the new Covid wave was not prominent in India.

The company reported a weak fourth quarter, with a sequential decline in receivables/spending.

The spends

While overall spends rose 11% year on year (YoY) they logged a 5% decline sequentially, within which retail spends were up 13% YoY (-4% QoQ), while corporate spends declined 10% QoQ (flat YoY).

Retail spends remained higher than pre-Covid levels, while corporate spends reached pre-COVID levels – on the back of new use cases making up for the loss in travel spends. Online retail spends form ~52% of the total retail spends.

This development comes when a major rival HDFC Bank is hamstrung as RBI has barred it from issuing new credit cards.

According to the management, spends across categories, barring travel and entertainment, have reached pre-Covid levels. Corporate spends have also reached pre-Covid levels, while corporate travel remains impacted. New use cases across corporates have been making up for the loss in travel spends.

However, the YoY growth is far lower than the pre-pandemic growth trend, which remains a worry.

Also, the gross non-performing assets (GNPA) ratio increased to 4.96% (versus proforma 4.51% in the December quarter), while the NNPA ratio declined to 1.15% (versus 1.58% in the third quarter of FY21).

Total receivables

Total receivables grew 4% YoY (2.5% QoQ decline) to Rs 25110 crore. The receivables mix indicated a marginal increase in the number of transactors and decline in revolvers – resulting in moderation in yields and an impact on the margins. Receivables per card continued to decline, reaching Rs 21,000 crore in the fourth quarter.

With the spends towards essentials are small in size than discretionary, the second wave of the pandemic poses significant risks to growth for SBI Card.

SBI Cards results

SBI Cards reported net profit growth of 110% YoY to Rs 175 crore, which was below analyst estimates. It was affected by a 21% YoY/8% sequential decline in interest income and modest fee income. Although, lower opex supported pre-provision operating profit (PPoP). For FY21, NII (net interest income)/PPOP was up 9.7%/9.6% YoY, while PAT declined ~21% YoY. NII declined 18.3% YoY, with margins down 130bp QoQ to 13.2%. Income from fees and services was stable QoQ at INR11.1b (+16% YoY) as overall spends declined ~5% QoQ. Thus, total income grew 2% YoY to INR22.2b, while opex declined 4.6% QoQ, resulting in stable PPoP (9% miss).

Cards in force grew 12% YoY to 11.8 million. New account sourcing for the fourth quarter stood at 93% of 4QFY20 levels. SBI contributed ~54% to new cards sourced, which accounts for ~44% of the overall card base.

For the financial year ended March 31, total income was at Rs 9,714 crore for FY21 vs Rs 9,752 crore for FY20. The profit after tax came at Rs 985 crore for FY21 versus Rs 1,245 crore in the previous fiscal.

The total balance sheet size as of March 31, 2021, was Rs 27,013 crore as against Rs 25,307 crore as on the same date of last year.



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ICICI Bank pushes on retail as other lenders slow down, BFSI News, ET BFSI

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– By Shashank Singhal

ICICI Bank Ltd. reported strong fourth-quarter earnings, with revenues and core income increasing and asset quality remaining stable driven by loan growth and higher profitability.

Credit Growth:

The Total advances of the bank increased by 14% year-on-year to 733,729 crores on March 31, 2021 from ` 645,290 crore on March 31, 2020. Bank’s credit growth was mainly driven by retail segment. On March 31, 2021, the retail loan portfolio had grown by 20% year on year and 7% sequentially which has been double the system retail loan growth. Retail accounted for 67% of the overall portfolio. Retail mortgages grew by 22% year on year being the largest incremental contributor to growth. Banks continue to push for higher retail loan growth. Disbursements to higher rated corporates and public sector undertakings (PSUs) across various sectors drove growth in the performing domestic corporate portfolio by about 13% year on year.

Among other retail segments, business loans increased by 40% year over year, while rural loans (which include 50% Jewel loans) increased by 27% year over year. The book in the CV, two-wheeler, and credit card segments increased Quarter on quarter, but the book in the CV, two-wheeler, and credit card segments remained flat.

Bank’s retail growth can be attributed to digitization. Digital initiative such as ‘EMI @ Internet Banking’ which allows preapproved customers to convert their high value transactions into instant EMIs at the time of purchase on their retail internet banking platform and graining traction in the cards business through digital platform boosted the retail growth. The growth was also aided by the bank’s expansion of footprint in tier 2, 3 and 4 cities and low interest rates.

Slippages

According to CLSA, ICICI Bank’s slippage at Rs 5,500 crore (0.75 per cent of loans) was a positive surprise. Retail slippage increased by less than 2x to 2.4 per cent in FY21 vs 1.4 per cent in FY20 which, the brokerage believes, is manageable given the pandemic which indicates that Bank has been cautious rather aggressive in lending retail loans.

Asset Quality

ICICI Bank’s gross non-performing asset ratio stood at 4.96% compared with 5.42% in the October-December quarter while the net NPA ratio declined to 1.14% on March 31, 2021 from 1.26% (on a proforma basis on December 31, 2020) and 1.41% on March 31, 2020.Bank maintains healthy specific provision coverage ratio of 78% of NPAs and contingent buffer at 1% of loans.

HDFC slows down on Retail

HDFC Bank reported 14% year-on-year growth in domestic advances on 31st March 2020 mainly driven by growth in wholesale loans which grew by 21.7% from last year while as per regulatory [Basel 2] segment classification, domestic retail loans grew only by 6.7%. Wholesale loans now form 53% of the total loan book. Retail loans accounted for 47% compared to 67% of ICICI Bank showing different target segments of the Banks.

For the first time in many years, ICICI Bank’s loan growth exceeded that of HDFC Bank. The Overall domestic loan growth of 18% year-on-year (6% quarter-on-quarter) of ICICI has been 3x that of system loan growth and 400 basis points above HDFC Bank.

Banks cautious on Retail loans

Amid the uncertainty provided by the pandemic other lenders such as Kotak has also cut down on the retail front. Banks are taking cautious stance on extending credit to avoid a spike in asset quality issues. Banks are falling back on the secure options.

ICICI Securities in a note recently said, “Kotak Mahindra Bank’s management had highlighted that unsecured retail and CV (bus operator segment) portfolios were reflecting disproportionate stress. Beside this, MTM gain on investment portfolio, cost agility and low cost deposit based will cushion earnings impact.”



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HDFC Bank deploys mobile ATMs across India, BFSI News, ET BFSI

Banking & Finance

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Mumbai, HDFC Bank on Saturday said it has deployed mobile ATMs across India to assist customers during the lockdown.

“At restricted, sealed areas, the ‘Mobile ATMs’ will eliminate the need for general public to move out of their locality to withdraw cash,” the bank said in a statement.

“During the lockdown last year, HDFC Bank successfully deployed mobile ATMs in over 50 cities and facilitated lakhs of customers in availing cash to meet their exigencies.”

Accordingly, customers can conduct over 15 types of transactions using the ‘Mobile ATM’, which will be operational at each location for a specific period.

The ‘Mobile ATM’ will cover 3-4 stops in a day.

“We hope our mobile ATM will provide a great support for people who want to avail basic financial services without having to venture far from their neighbourhood,” said S. Sampathkumar, Group Head – Liability Products, Third Party Products and Non-Resident Business at HDFC Bank.

“This service will also be of great help to all the healthcare workers, and other essential service providers who have been working tirelessly to combat the pandemic.”

–IANS

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HDFC Bank deploys mobile ATMs

Banking & Finance

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Amidst surging Covid-19 infections that have led to localised lockdowns, private sector lender HDFC Bank has deployed mobile ATMs across the country.

These mobile ATMs will touch 19 cities including Mumbai, Chennai, Pune, Hyderabad, Ahmedabad, Delhi, Hosur, Trichy, Salem, Dehradun, Lucknow, and Allahabad.

The private sector lender will work with local authorities in identifying locations for the mobile ATMs in the respective cities while ensuring that strict Covid protocols are maintained.

The move comes at a time when many States have announced local lockdowns to curb surging infections.

The Indian Banks’ Association has also advised banks to restrict working hours from 10 am to 2 pm and follow the Covid-19 pandemic related standard operating procedures (SOPs) it issued last year, whereby they will provide only essential customer services.

Last year too in the first wave of the pandemic, many lenders had started mobile ATMs to ensure that customers could withdraw cash and do basic banking services without having to venture to their bank branches.

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RBI approves appointment of Atanu Chakraborty as part-time chairman of HDFC Bank, BFSI News, ET BFSI

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New Delhi, Apr 23 () Private sector lender HDFC Bank on Friday said the Reserve Bank has approved appointment of former Economic Affairs Secretary Atanu Chakraborty as the part-time chairman of the bank. “The Reserve Bank of India (RBI) vide its communication dated April 22, 2021, has approved the appointment of Atanu Chakraborty as the part time chairman of the bank… for a period of three years with effect from May 5, 2021 or the date of his taking charge, whichever is later,” HDFC Bank said in a regulatory filing.

HDFC Bank said a meeting of the board of directors of the bank will be convened in due course inter‐alia to consider the appointment of Atanu Chakraborty as the part-time chairman and additional independent director of the bank.

Chakraborty, a 1985 batch IAS officer of Gujarat cadre, retired as Secretary of Department of Economic Affairs in April 2020. Prior to that, he was Secretary of Department of Investment and Public Asset Management (DIPAM). Both departments come under the finance ministry.

Once he is appointed as chairperson, HDFC Bank will be the second private sector lender to have a former bureaucrat at the post. ICICI Bank is chaired by former Petroleum Secretary and Additional Secretary in the finance ministry G C Chaturvedi. SVK ANS ANS



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Housing demand structural, here to stay: Deepak Parekh

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Housing Development Finance Corporation (HDFC) Ltd Chairman Deepak Parekh on Thursday said the demand for housing is not pent-up demand but is structural demand and is here to stay.

“In my 44 years of working in the housing sector, I have to say that the strong demand that one has seen for housing in the recent period has certainly surprised on the upside,” he said at the One World One Realty Global Proptech Summit 2021.

The growth in home loans has been aided by low interest rates, softer or stable property prices and continued fiscal benefits on home loans, he further said.

“Technology has enabled developers to virtually showcase their properties and home loan providers, too, have leveraged their digital platforms to continue to serve new and existing customers,” he said.

HDFC enters into co-lending partnership with Indiabulls Housing Finance

According to Parekh, demand for housing is a combination of first time homebuyers, customers moving up the property ladder by shifting to larger homes; acquiring a second home in another location; and the current work from home situation in which proximity to the workplace is perhaps less compelling.

He also noted that the government’s ‘Housing for All’ programme has given a boost to the sector.

Under the Prime Minister’s Awas Yojana, as at March 31, 2021, an estimated 1.13 crore homes have been sanctioned, Parekh said. “This has been a game-changer for the housing sector as the ultimate objective is building a more inclusive and property owning democracy,” he said.

HDFC Bank Q4FY21: What is spooking HDFC Bank’s stock

Meanwhile, noting that infrastructure creation is one way to ensure a sustained recovery, without spiralling inflation, Parekh said that construction and real estate development is going to play a key role in all major global economies.

“And now more than ever before, the role of technology and innovation becomes extremely important,”he said, while pointing out that the construction industry is one of the least digitalised sectors in the world.

Stressing the need for digital infrastructure for the real estate sector, he said prop tech companies can play a big role in accelerating the government’s smart city mission as well as help local level bodies and municipalities in terms of facilitating online approvals of building permits.

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Banks to limit branch operations in Covid areas, BFSI News, ET BFSI

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Banks are planning to limit footfalls to prevent the spread of infections in areas where Covid cases are on the rise. On Wednesday, the Indian Banks’ Association convened a meeting of bank chiefs to assess the current situation.

The services that branches will provide will be determined by state-level bankers’ committees (SLBCs). The SLBC will also provide the specific standard operating procedures (SOPs) for branches. Bank branches, being classified as essential, have been exempted from the lockdown.

During the same period last year, bank branches cut down on several activities to reduce footfalls. In 2020, HDFC Bank reduced its operating hours and stopped the sales of foreign currency. SBI had restricted services like account opening, cash withdrawals, passbook printing and currency exchanges. in the first phase of the lockdown, last year.

Banker present at the meeting said, “Customers can obtain their balance or statement through a variety of digital channels. Customers can use missed call banking, WhatsApp banking, mobile applications, and ATMs to avail most of the services without having face-to-face interaction.”



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