hdfc bank investor_presentation.pdf

7/31/2019 HDFC Bank Investor_Presentation.pdf

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Investor Presentation


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Tracking the India Growth Story

Meeting Diverse Customers Needs

Unique Franchise in the Indian Banking Sector

Key Business Initiatives

Financial Highlights

Value Proposition

1

Contents


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Private Consumption

Strong distribution network and retail customer franchise Equally well positioned in urban and rural markets

Leading player across retail loan categories

Government

Large tax collector for the Government of India

Significant provider of cash management services for publicsector and semi government undertakings

Investment

Leading working capital banker to capital goods

manufacturers

Term Loans for capex and brown field expansion

Project financing to strong and established players

Debt syndication team in place

India GDP*

2

*Source CSO GDP at Market Prices at current prices

FYFiscal year ended March 31

`- Rupees

`. Tn

Investment

Government

Private consumption

0

10

20

30

40

50

60

70

80

90

100

FY 2010 FY 2011 FY 2012


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Tracking the India Growth StoryMeeting Diverse Customers Needs




Value Proposition

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Contents


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Wide Range of Products and Customer Segments

Loan Products:

Auto LoansRetail Business BankingPersonal Loans

Credit Cards2-Wheeler LoansCommercial Vehicles FinanceConstruction Equipment FinanceHome Loans / MortgagesLoans against SecuritiesTractor and Agri loansEducation LoansGold Loans

Other Products / Services:

Depository AccountsMutual Fund SalesPrivate Banking

Insurance Sales (Life, General)NRI ServicesBill Payment ServicesPOS TerminalsDebit CardsGold SalesForeign Exchange ServicesBroking (HDFC Securities Ltd)

Deposit Products:

Savings AccountsCurrent AccountsFixed / Recurring Deposits

Corporate Salary Accounts

Commercial Banking:

Working CapitalTerm LoansBill CollectionForex & DerivativesWholesale DepositsLetters of CreditGuarantees

Transactional Banking:

Cash ManagementCustodial ServicesClearing Bank ServicesCorrespondent BankingTax CollectionsBanker to Public Issues

Key Segments:

Large CorporateEmerging CorporatesFinancial InstitutionsGovernment / PSUsSupply Chain (Suppliers and dealers)AgricultureCommodities

Products / Segments

Foreign ExchangeDebt SecuritiesDerivativesEquities

Other Functions:

Asset Liability ManagementStatutory Reserve Management

Complete Suite of Products to Meet Diverse Customers Needs

Treasury

WholesaleBanking

RetailBanking

4


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Total Deposits Gross Advances Profit Before Tax

5

Indian GAAP figures. Fiscal Year ended 31stMarch;` - Rupees

Gross advances and Profit Before Taxes classified as per RBI guidelines for segmental reporting (Basel II).

Other Banking Operations Segment (which includes Credit Cards, Third Party Product sales etc.) has been added to the Retail Segment

Business Mix

Customer segments - main drivers of net revenues

Well balanced loan mix between wholesale and retail segments Higher retail revenues partly offset by higher operating and credit costs

Equally well positioned to grow both segments

`. Bn`. Bn `. Bn

0

1,500

3,000

2010 2011 2012

Retail Wholesale

0

1,250

2,500

2010 2011 2012

Retail Wholesale

0

50

100

2010 2011 2012

Retail Wholesale


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Value Proposition

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Contents


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Strong National Network

All branches linked online, real time

Anytime, Anywhere, Anyhow banking

75% branches outside the top 9 cities

Customer base of 26 million

Branch classification

Mar 09 Mar 10 Mar 11 Mar 12

Cities 528 779 996 1399

Branches 1412 1,725 1,986 2,544

ATMs 3295 4,232 5,471 8,913

Metro36%

Urban34%

Semi

Urban22%

Rural8%

Mar '09

Metro28%

Urban27%

Semi

Urban36%

Rural9%

Mar '12


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0

1500

3000

2010 2011 2012

Time Savings Current

Total Deposits Core CASA Ratio Average Saving Balance per Account

Healthy proportion of CASA (current & savings) deposits

Floats from multiple transactional banking franchises

Continued growth in new customer acquisitions Provides customer base for ongoing cross-sell through branches

Quality growth rather than mere numbers

`. Bn

Indian GAAP figures. Fiscal year ended 31st March

Core CASA ratio based on daily average balances for the year

` - Rupees

8

`.

High Quality Deposit Franchise

0%

26%

52%

2010 2011 2012

0

25,000

50,000

2010 2011 2012


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Amongst the lowest deposit costs in the industry Healthy margins relatively stable over rising & declining interest rates

Average yields supported by higher proportion & product mix of retail loans


9

Low Funding Costs Healthy Margins

4.35% 4.25% 4.22%

0.00%

2.50%

5.00%

2010 2011 2012

Net Interest Margin

4.66%4.30%

5.72%

0.00%

3.50%

7.00%

2010 2011 2012

Cost of Deposits


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Indian GAAP figures. Fiscal year ended 31stMarch; FY - Fiscal Year ended 31stMarch.

* Profit / (loss) on sale and revaluation (mark to market) of the Government Bond portfolio etc.& includes miscellaneous income

` - Rupees

10

Strong Non-Funded Revenues

Other Income (non-funded revenues) at 30% of Net Revenues in FY 2012

Composition of Other Income in FY 2012: Fees and commissions 81%,

FX and Derivatives Revenues 22%,

Loss on sale of Investments (3%)

Multiple sources of fees &commissions:

Banking charges (Retail & Wholesale)Retail Asset FeesCredit card FeesThird party product salesCash management

Trade FinanceDepositary chargesBullion salesCustody

`. Mn

-2,000

27,000

56,000

2010 2011 2012

P/L on Investments*

FX & Derivatives

Fees & Commission


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The charts above cover only transactions initiated by our own customers and which could have been transacted at the Banks branches.

Transactions such as (a) SMS alerts sent to customers, (b) point of sale (POS) transactions, and (c) transactions by holders of other

banks cardholders have therefore been excluded.

% Customer Initiated Transactions by Channel

ATMs

40%

Branches

43%

Phone

Banking14%

Internet

2%

Mobile

1%

2001

Multiple Delivery ChannelsGreater Choice and Convenience for Our Retail

Customers

Regionalized Processing Units Derive Economies of Scale

Electronic Straight Through Processing Reduce Transaction Costs and Error Rates

Data Warehousing, CRM, Analytics Improve Sales & Credit Efficiencies, Cross-sell

Innovative Technology Application Provide New or Superior Products

2012

11

Leveraging Technology

ATMs30%

Branches

18%

Phone

Banking12%

Internet

38%

Mobile

2%


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NPA% to Advances Loan Loss Provisions`. Bn

Amongst the best portfolio quality (wholesale & retail) in the industry

Strong credit culture, policies, processes

Specific provision cover (excluding write-offs, technical or otherwise) at 82% of NPAs,

total provision coverage of over 100%

Restructured loans formed 0.4% of the Bank's gross advances as on March 31, 2012

Indian GAAP figures. Fiscal year ended 31stMarch.

Net Non Performing Assets (NPA) = Gross NPA less specific loan loss provisions

` - Rupees

12

Healthy Asset Quality

0

14

28

2010 2011 2012

Gross NPAs Specific Provision General Provision

1.43%

1.05% 1.02%

0.31%0.19% 0.18%

0%

1%

2%

2010 2011 2012Gross NPA % Net NPA %


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0

26,000

52,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Net Profit

13.5

17.0

22.1

0

13

25

2010 2011 2012

ROA

`. Mn

EPS

1.53% 1.58%

1.77%

0%

1%

2%

2010 2011 2012

Indian GAAP figures. Fiscal year ended 31st March;` - Rupees

* 10 year Compounded Annual Growth Rate

EPS for the year 2010 & 2011 has been recomputed to give effect of the share split from`10 to`2

113

Consistent Financial Performance

`.


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Value Proposition

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Contents


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Leading provider of electronic banking services for supply chain management (SCM)

Structured cash management-cum-vendor/distributor finance

Corporate

Dealers

DistributorsOEM Customers

Vendors

`. BnWholesale Advances

Indian GAAP figures. Fiscal year ended 31st March; Total wholesale advances are as per the RBI guidelines for segmental reporting (Basel II).

Othersincludes Capital markets and commodity finance, and other consumer loans over`50 million.

FIG Financial Institutions and Government group, CV/CE Large ticket commercial vehicle and construction equipment loan ` - Rupees

115

Accessing Multiple Segments

Leveraging relationships with large & emerging

corporates for multiple revenue streams

Focus on house banking

Balanced mix between working capital financing,

term loans and transactional banking

Well diversified loan portfolio across major

industry segmentsCorporate

EmergingCorporate

BusinessBanking

Others

CV/CEFIG

-

500

1,000

2010 2011 2012


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0

850

1,700

2010 2011 2012

Primary Settlements Accounts(Stock Exchanges)

0

14,000

28,000

2010 2011 2012

Gross Cash Management Volumes * Nos.

Clear market leader : cash settlements on stock & commodities exchanges

Leading provider of cash management solutions Large corporates and SME

Financial Institutions

Government (including tax collections)

For the Fiscal year ended 31st March,

* Gross Cash Management Volumes adjusted for collections on account of IPOs

` - Rupees

`. Bn

116

Focus on Transactional Banking Opportunities


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0

6,000

12,000

2010 2011 2012

FX & Derivatives Revenues

Revenues Largely customer driven, low reliance on trading revenue

Treasury advisory services

Plain vanilla FX offerings to retail and business banking segments

FX and derivatives product sales to corporate and institutional customersIndian GAAP figures. Fiscal year ended 31st March;` - Rupees

Corp Corporate, ECG Emerging Corporate Group, BB Business Banking, FIG Financial Institutions & Government Group;

Othersincludes Capital Markets and Commodity Finance

`. Mn

117

Customer Focused Treasury Products

Corp18%

ECG10%

Retail54%

BB6%

FIG4%

Others8%

Customer Revenues Mix


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Well diversified product mix

Balancing volumes and market

share with margins and risk

Home Loans* (Mortgage) offering

origination (loan sanctions) nowaround` 8 Bn per month

Loan losses within product pricing

parameters

`. Bn

Retail loans are net of loans sold and include loan assignments. Retail loans are classified as per RBI guidelines for segmental reporting (Basel II).

* In arrangement with HDFC Ltd., Others includes Tractor Loans, Loans to Self Help Group, Retail overdrafts, Loans againstSecurities, etc

Indian GAAP figures. Fiscal year ended 31st March;` - Rupees

118

Retail Loans Profitable Growth

AutoLoans

BusinessBanking

CommercialVehicles

PersonalLoans

HomeLoans

Others

Credit Cards

Gold Loans

Two Wheelers

0

600

1,200

2010 2011 2012


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0

35

70

2010 2011 2012

Market leader in credit card (5.6 mn cards as of Mar 12)

Around 70% of new credit cards issued to internal customers

Loss rates at cyclical lows in FY2012, well within the range priced in

Merchant acquiring over 180,000 POS terminals, 44% growth in thru-puts

Number of Cards Credit Cards Receivables Acquiring Thruputs

Indian GAAP figures. Fiscal year ended 31stMarch.` - Rupees

FY 2012 Fiscal year ended 31stMarch 2012

POS Point of Sale

`.Bn`.Bn

Mn

119

Cards Achieving Scale

0

11

22

2010 2011 2012

Debit cards Credit cards

0

250

500

2010 2011 2012


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0

13

26

2010 2011 2012

Insurance Premium

Life General

0

600

1,200

2010 2011 2012

Mutual Fund Sales

Steady performance in a challenging, volatile environment

New regulation and change in product mix adversely impacted fees Relationship managers for private banking and high net worth segments

Branch sales process to drive distribution of third party products


` - Rupees

20

Distribution of Third Party Products

`.Bn`.Bn


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Banking on Rural India

LocalGovernment

Self HelpGroups

FarmersIntermediaries

(Arhatiyas, traders)

FoodProcessors

Individuals

Pre and Post Harvest Credit

Tractor Loans

Kisan Cards

Small Working Capital Loan

Regular / No frills savings accounts

Term / Micro deposits

Life and General Insurance

Payment ecosystem

Banking Services for the rural eco-systemthrough customised loan and deposit

products whilst maintaining credit standards

Other banking products

Liability Products

Sustainable Livelihood Banking

Loan Products


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HDFC Securities Limited

Amongst the top retail equity brokerages in the country

Over 180 branches and 1.4 million customers

Revenues from brokerage as well as distribution of financial products

FY 2012 - Net Profit :`541 million

HDB Financial Services

NBFC catering to certain customer segments not served by the Bank

Inherently lower cost structure

Network size of 180 branches

FY 2012 - Loan book :`39,641 million, Net Profit :`511 million

22

Subsidiary Companies

` - Rupees

FY 2012Fiscal year ended March 31, 2012


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Value Proposition

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Contents


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Net profit up by 30% to`14.5 Bn

Gross advances increased by 22% to`1,969 Bn

Deposits up 18% to`2,467 Bn

CASA ratio at 48.4%

Core Net Interest Margin at 4.2%

Core Cost-to-income ratio at 49.8%

Gross NPA / gross advances at 1.0%

Net NPA / net advances at 0.2%

Capital adequacy ratio (CAR) - total 16.5% of which tier I at 11.6%

25

Indian GAAP figures (Bn =Billion);` - Rupees

Net NPA = Gross NPA less specific loan loss provisions

Comparisons are with respect to corresponding figures for the quarter ended March 31, 2011

Financial Highlights - Quarter ended March 2012


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Meeting Diverse Customers Needs


Key Business InitiativesFinancial Highlights

Value Proposition

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Contents


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Value Proposition Healthy Growth, Low Risk

Healthy balance sheet andrevenue growth

Leveraging organic andinorganic growth

opportunities

Proven ability to generateShareholder Value

Branch Sales Process,Data Mining & CRM,geared for Cross sell

Strong Risk management,

focus on asset quality

Disciplined margin andcapital management with a

focus on ROA/ROE

Nationwide network, withexpanding semi urban and

rural footprint

Growing economy /banking industry,

Gaining market share

Leading (Top 3) playeracross multiple products

Wide Product range and

multiple customer segment


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Certain statements are included in this release which contain words or phrases such as will, aim, will likelyresult, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to,future, objective, goal, project, should, willpursue and similar expressions or variations of theseexpressions that are forward-looking statements.Actual results may differ materially from those suggested bythe forward-looking statements due to certain risks or uncertainties associated with our expectations with respectto, but not limited to, our ability to implement our strategy successfully, the market acceptance of and demand forvarious banking services, future levels of our non-performing loans, our growth and expansion, the adequacy ofour allowance for credit and investment losses, technological changes, volatility in investment income, our abilityto market new products ,cash flow projections, our outcome of any legal, tax or regulatory proceedings in Indiaand in other jurisdictions we are or become a party to, the future impact of new accounting standards, our abilityto pay dividends, the impact of changes in banking regulations and other regulatory changes in India and other

jurisdictions on us, our ability to roll over our short-term funding sources and our exposure to market andoperational risks. By their nature, certain of the market risk disclosures are only estimates and could be materiallydifferent from what may actually occur in the future. As a result, actual future gains, losses or impact on netincome could materially differ from those that have been estimated.

In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to: general economic and politicalconditions in India and the other countries which have an impact on our business activities or investments; the

monetary and interest rate policies of the government of India; inflation, deflation, unanticipated turbulence ininterest rates, foreign exchange rates, equity prices or other rates or prices; the performance of the financialmarkets in India and globally; changes in Indian and foreign laws and regulations, including tax, accounting andbanking regulations; changes in competition and the pricing environment in India; and regional or generalchanges in asset valuations.

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