HDFC Bank Investor presentation: June 2013
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HDFC Bank Investor presentation: June 2013






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HDFC Bank Investor presentation: June 2013 HDFC Bank Investor presentation: June 2013 Presentation Transcript

  • Investor Presentation June 2013
  • Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 1 Contents
  • Well positioned across GDP spectrum Private Consumption • Equally well positioned in urban and rural markets • Leading player across retail loan categories • Focus on working capital finance and trade services Government • Large tax collector for the Government of India • Significant provider of cash management services for public sector and semi government undertakings Investment • Term Loans for capex and brown field expansion • Debt syndication team in place • Project financing to strong and established players • Leading working capital banker to capital goods manufacturers India GDP* 2 *Source CSO – GDP at Market Prices at current prices FY – Fiscal year ended March 31 ` - Rupees `. Tn Investment Government Private consumption 0 10 20 30 40 50 60 70 80 90 100 FY 2011 FY 2012 FY 2013
  • Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 3 Contents
  • Wide Range of Products and Customer Segments Loan Products: Auto Loans Personal Loans Home Loans / Mortgages Commercial Vehicles Finance Retail Business Banking Credit Cards Loans against Gold 2-Wheeler Loans Construction Equipment Finance Loans against Securities Agri and Tractor loans Education Loans Other Products / Services: Depository Accounts Mutual Fund Sales Private Banking Insurance Sales (Life, General) NRI Services Bill Payment Services POS Terminals Debit Cards Gold Sales Foreign Exchange Services Broking (HDFC Securities Ltd) Deposit Products: Savings Accounts Current Accounts Fixed / Recurring Deposits Corporate Salary Accounts Loan products contd… Self Help Group Loans Joint Liability Group Loans Kisan Gold Card Commercial Banking: Working Capital Term Loans Bill Collection Forex & Derivatives Wholesale Deposits Letters of Credit Guarantees Transactional Banking: Cash Management Custodial Services Clearing Bank Services Correspondent Banking Tax Collections Banker to Public Issues Key Segments: Large Corporate Emerging Corporates Financial Institutions Government / PSUs Supply Chain (Suppliers and Dealers) Agriculture Commodities Products / Segments: Foreign Exchange Debt Securities Derivatives Equities Other Functions: Asset Liability Management Statutory Reserve Management Complete Suite of Products to Meet Diverse Customers’ Needs Treasury Wholesale Banking Retail Banking 4 Investment Banking: Debt Capital Markets Equity Capital Markets Project Finance M&A and Advisory
  • Total Deposits Gross Advances Profit Before Tax 5 Indian GAAP figures. Fiscal Year ended 31st March; ` - 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 1,600 3,200 2011 2012 2013 Retail Wholesale 0 1,300 2,600 2011 2012 2013 Retail Wholesale 0 60 120 2011 2012 2013 Retail Wholesale
  • Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 6 Contents
  • 7 Strong National Network  All branches linked online, real time  Bank added 193 ‘micro’ branches in FY 2013  Customer base of over 28 million, net addition of over 2 million customers in FY 2013 Branch classification Mar ‘10 Mar ‘11 Mar ‘12 Mar ‘13 Branches 1,725 1,986 2,544 3,062 ATMs 4,232 5,471 8,913 10,743 Cities / Towns 779 996 1,399 1,845 Metro 35% Urban 31% Semi Urban 26% Rural 8% Mar ‘10 Metro 24% Urban 24% Semi Urban 36% Rural 17% Mar '13 FY – Fiscal year ended March 31
  • - 1,600 3,200 2011 2012 2013 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% 2011 2012 2013 Savings Current 0 25,000 50,000 2011 2012 2013
  • • 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 Indian GAAP figures. Fiscal year ended 31st March 9 Low Funding Costs – Healthy Margins 4.44% 4.43% 4.47% 0.00% 3.00% 6.00% 2011 2012 2013 Net Interest Margin 4.30% 5.72% 6.13% 0.00% 3.50% 7.00% 2011 2012 2013 Cost of Deposits
  • Indian GAAP figures. Fiscal year ended 31st March; FY - Fiscal Year ended 31st March. * Recoveries includes miscellaneous income ` - Rupees 10 Strong Non-Funded Revenues Multiple sources of fees & commissions: Banking charges (Retail & Wholesale) Retail Asset Fees Credit card Fees Third party product sales Cash management Trade Finance Depositary charges Bullion sales Custody `. Mn -2,000 38,000 78,000 2011 2012 2013 Fees & Commission Fx & Derivatives Recoveries* P/L on Investments • Other Income (non-funded revenues) at 30% of Net Revenues in FY 2013 • Composition of Other Income in FY 2013: • Fees and commission 75%, • FX and Derivatives Revenues 15%, • Recoveries from written-off accounts 8%, • Profit / Loss on sale of Investments 2%
  • The charts above cover only transactions initiated by our own customers at our channels and which could have been transacted at the Bank‟s 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 2001 Multiple Delivery Channels Greater 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 2013 11 Leveraging Technology Branches 43% Phone Banking 14% Internet & Mobile 3% ATM 40% ATM 30% Branches 18% Internet & Mobile 44% Phone Banking 8%
  • 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 80% of NPAs • Restructured loans formed 0.2% of the Bank's gross advances as on March 31, 2013 • Floating provisions at `1,835 crore as on March 31, 2013 Indian GAAP figures. Fiscal year ended 31st March. Net Non Performing Assets (NPA) = Gross NPA less specific loan loss provisions ` - Rupees 12 Healthy Asset Quality -0 14 28 2011 2012 2013 Gross NPAs Specific Provision General Provision 1.05% 1.02% 0.97% 0.19% 0.18% 0.20% 0% 1% 2% 2011 2012 2013 Gross NPA % Net NPA %
  • Net Profit ROA `. Mn EPS Indian GAAP figures. Fiscal year ended 31st March * 10 year Compounded Annual Growth Rate EPS for the year 2011 has been recomputed to give effect of the share split from face value of ` 10 to face value of ` 2 113 Consistent Financial Performance `. - 35,000 70,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.58% 1.77% 1.90% 0% 1% 2% 2011 2012 2013 17.0 22.1 28.5 0 15 30 2011 2012 2013
  • Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 14 Contents
  • • Well diversified product mix • Balancing volumes and market share with margins and risk • Home Loans* (Mortgage) offering – origination (loan sanctions) now around ` 10 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 against Securities, etc Indian GAAP figures. Fiscal year ended 31st March; ` - Rupees 115 Retail Loans – Profitable Growth Auto Loans Business Banking Commercial Vehicles Personal Loans Home Loans Credit Card Others Kisan Gold Card Gold Loans 0 700 1,400 2011 2012 2013 Two wheelers
  • `. Bn Wholesale Advances Indian GAAP figures. Fiscal year ended 31st March; Total wholesale advances are as per the RBI guidelines for segmental reporting (Basel II). „Others‟ includes 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 116 Wholesale Banking - 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 segments • Investment banking capability built across various industry segments 0 600 1,200 2011 2012 2013 FIG CV / CE Others Business Banking Emerging Corporate Corporate • Leading provider of electronic banking services for supply chain management (SCM) • Structured cash management-cum-vendor/distributor finance Corporate Dealers Distributors OEM Customers Vendors
  • 0 850 1,700 2011 2012 2013 Primary Settlements Accounts (Stock Exchanges) 0 14,000 28,000 2011 2012 2013 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 117 Focus on Transactional Banking Opportunities
  • 0 6,000 12,000 2011 2012 2013 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 customers Indian GAAP figures. Fiscal year ended 31st March; ` - Rupees Corp – Corporate, ECG – Emerging Corporate Group, BB – Business Banking, FIG – Financial Institutions & Government Group; „Others‟ includes Capital Markets and Commodity Finance `. Mn 118 Customer Focused Treasury Products Corp 17% ECG 10% Retail 55% BB 6% FIG 3% Others 9% Customer Revenues Mix
  • 0 60 120 2011 2012 2013 • Market leader in credit cards • Around 75% of new credit cards issued to internal customers • Loss rates well within the range priced in • Merchant acquiring – over 240,000 POS terminals, 53% growth in thru-puts in FY 2013 Number of Cards Credit Cards Receivables Acquiring Thruputs Indian GAAP figures. Fiscal year ended 31st March. ` - Rupees FY 2013 – Fiscal year ended 31st March 2013 POS – Point of Sale `.Bn `.BnMn 119 Cards – Achieving Scale 0 12 24 2011 2012 2013 Debit cards Credit cards 0 400 800 2011 2012 2013
  • 20 Banking on Rural India Local Government Self Help Groups Farmers Intermediaries (Arhatiyas, traders) Food Processors Individuals Pre and Post Harvest Credit Tractor Loans Kisan Cards Small Working Capital Loan Regular / Basic Savings Bank Deposit Account Term / Micro deposits Life and General Insurance Payment ecosystem Banking Services for the rural eco-system through customised loan and deposit products whilst maintaining credit standards Other banking products Liability Products Sustainable Livelihood Banking Loan Products Rural banking products offered through traditional and micro branches in the deeper geography of the country Micro branches are primarily two member branches to expand and deepen the penetration in the rural market including in unbanked area.
  • HDB Financial Services Limited • NBFC catering to certain customer segments not served by the Bank • Main Products: Retail secured and unsecured loans, Insurance services and Collection services • Network of 230 branches • FY 2013 - Loan book : ` 82,037 million, Net Profit : ` 1,024 million HDFC Securities Limited • Amongst the leading equity brokerages in the country • Over 190 branches and 1.6 million customers • Revenues from brokerage as well as distribution of financial products • FY 2013 - Net Profit : ` 668 million 21 Subsidiary Companies ` - Rupees FY 2013 – Fiscal year ended March 31, 2013
  • Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 22 Contents
  • Indian GAAP figures (` Mn) , ` - Rupees; *Recoveries includes miscellaneous income 23 Key Financials `. In million Quarter Ended June 2013 Quarter Ended June 2012 Change Year Ended Mar 13 Year Ended Mar 12 Change Net Interest Income 44,187 36,524 21.0% 158,111 128,846 22.7% Fees & Commissions 12,845 11,505 11.6% 51,669 43,121 19.8% FX & Derivatives 3,143 3,148 -0.2% 10,101 11,388 -11.3% Profit / (loss) on Investments 1,995 665 199.9% 1,613 (1,959) -182.3% Recoveries* 1,273 1,176 8.2% 5,143 5,286 -2.7% Net Revenues 63,443 53,018 19.7% 226,637 186,682 21.4% Operating Costs 30,382 26,266 15.7% 112,361 92,776 21.1% Provisions & Contingencies 5,271 5,816 -9.4% 16,770 18,774 -10.7% Profit Before Tax 27,790 20,936 32.7% 97,506 75,132 29.8% Tax 9,351 6,762 38.3% 30,243 23,461 28.9% Profit After Tax 18,439 14,174 30.1% 67,263 51,671 30.2%
  • • Net profit up by 30.1% to ` 18.4 Bn • Gross advances increased by 21.2% to ` 2,603 Bn • Deposits up by 17.8% to ` 3,033 Bn • CASA ratio at 44.7% • Net Interest Margin at 4.6% • Cost-to-income ratio at 47.9% • Gross NPA / gross advances at 1.0% • Net NPA / net advances at 0.3% • Capital adequacy ratio (CAR) as per Basel III - total 15.5% of which tier I at 10.5% 24 Indian GAAP figures (Bn =Billion); ` - Rupees Net NPA = Gross NPA less specific loan loss provisions, Capital adequacy ratio computed as per RBI‟s Basel III capital regulations Comparisons are with respect to corresponding figures for the quarter ended June 30, 2012 Financial Highlights - Quarter ended June 2013
  • Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 25 Contents
  • 26 Value Proposition – Healthy Growth, Low Risk Healthy balance sheet and revenue growth Leveraging organic and inorganic growth opportunities Proven ability to generate Shareholder Value Branch Sales Process, Data Mining & CRM, geared for Cross sell Strong Risk management, focus on asset quality Disciplined margin and capital management with a focus on ROA/ROE Nationwide network, with expanding semi urban and rural footprint Growing economy / banking industry, Gaining market share Leading (Top 3) player across multiple products Wide Product range and multiple customer segment
  • Certain statements are included in this release which contain words or phrases, such as “will”, “aim”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “future”, “objective”, “project”, “should”, and similar expressions or variations of these expressions, that are “forward-looking statements”. Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to implement our strategy successfully, the market acceptance of and demand for various banking services, future levels of our non-performing loans, our growth and expansion, the adequacy of our allowance for credit and investment losses, technological changes, volatility in investment income, our ability to market new products, cash flow projections, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions we are or become a party to, the future impact of new accounting standards, our ability to 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 and operational risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what may actually occur in the future. As a result, actual future gains, losses or impact on net income could materially differ from those that have been estimated. Our forward looking statements speak only as of the date on which they are made and we do not undertake any obligation, and we do not intend, to update or revise any forward looking statements to reflect events or circumstances after the date in the statement, even if our expectations or any related events or circumstances change. 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 political conditions, instability or uncertainty in India and other countries which have an impact on our business activities or investments caused by any factor including the global financial crisis and problems in the Eurozone countries, terrorist attacks in India, the United States or elsewhere, anti-terrorist or other attacks by the United States, a United States-led coalition or any other country, tensions between India and Pakistan related to the Kashmir region, military armament or social unrest in any part of India, the monetary and interest rate policies of the government of India, natural calamities, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in Indian and foreign laws and regulations, including tax, accounting and banking regulations, changes in competition and the pricing environment in India, and regional or general changes in asset valuations.