Ladies and gentlemen, good evening and welcome to HDFC Bank Limited Q1 FY 'twenty two Earnings Conference Call on the Financial Results presented by the management of HDFC Bank. HDF. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after a brief commentary by the management.
HDFC.
Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank. Thank you and over to you, sir.
Okay. Thank you, Aman. HTS. Although we see some the queue building up, but we'll get started so we can move on. Good evening and welcome to all.
HDFC. I appreciate the participants calling in today and listening with us. Firstly, we'll go through some background, environmental update, And then we'll get into the business highlights and then we'll go to the results. Let's start by placing on record our appreciation and thanks to all staff and HDFCS for Steadfast's entire less focus on meeting customer needs in the midst of this pandemic, particularly in this quarter, HCF, which was for most part impacted by COVID second wave. There were several thousands of staff who were diagnosed with COVID, More than 10%, 12% of the staff and all the staff and their families need special admiration and thank you.
We had less than 1,000 staff vaccinated at the beginning of quarter. HTA. Since then, we have done over 370 camps. We have also tied up with multiple hospitals to allow vaccination. HDFC.
We now estimate that more than 80,000 staff have had at least one dose of vaccination. During the quarter, activity indicators released HDFC. For the month of April May, we're downbeat. This is when talking about the economic activity released with downbeat, reflecting the impact of the rising COVID cases and lockdowns. HDF.
High frequency indicators such as power demand, auto sales, PMI slowed sequentially in April May. Rural demand has gauged by 2 year sales, Rural unemployment rate also took a hit. So this time around, compared to the first wave, the rural was also in the thick of
HDF.
However, in June, the economic activity improved in line with easing COVID related restrictions lifting of lockdowns in various states. This provides the backdrop of the activity in the quarter, which was mixed for most of the quarter, where almost, call it, 2 thirds or HDF. 35, 40 days of effective work that could happen, otherwise the business was muted for the rest of the time period. Well, GDP numbers for Q1 might look upbeat due to low base, the sequential growth is likely to contract. FY 2022, our Reno's view is that it would be 9.1%, brought down from little more than 10% that we talked about 3 months ago.
HDFC. CECL headwind inflation steady at 6.3% and our house view is that it will hover above 6% for next 2, 3 months It should be seen that we do expect RWA to continue towards supporting growth and keeping monetary stands accommodated. HDFC. During the prepared, our equity capital markets saw muted trends as compared to the previous quarter as private issuers Through a mix of IPO's rights, QIPs and block deals raised, it will be more than 24,000 crores versus ECT raise of 70,000 plus crores in Q4 HTS 21. Retail participation in IPOs has been strong during this quarter.
The ECP fundraising pipeline, both HTS. Public and Private Markets continue to be robust. During the quarter, we were mandated for 5 IPOs, including 1 IPO where we were appointed as lift lead HDFC Merchant Bankers. Fundraising through the Indian bond market was approximately 1.25% accrual in the quarter, HDFC, which was 49% or so lower year on year. Our bank is ranked number 2 HTA for Q1.
Our association now getting to some business highlights. HTS. Our association with CSCs is helping us offer cost effective services in semi urban and rural, the hub and spoke model where every CSC is mapped to a branch to TrueService. As of June quarter end, we have signed up approximately 1.71 lakh village level entrepreneurs, HDF of which 1.12 lakhs are onboarded as business regulators. In the month of June, we launched a new straight through process journey for HTS Consumer Durable Products at the VLE Center.
It empowers VLEs to issue sanction letters based on customers' eligibility. HDFC. This removes the bank's intervention and enables the VLE to do end to end processing of the loan. We have launched our chatbot, EVA, For the VLE specific queries, through EVA chat box, VLEs will learn about the products and services offered by HDFC Bank, HCF, which in turn will improve services offered to the last mile customers. Healthcare initiatives that we talked about in the past is building HDF.
Bank is building portfolio in line with the RBA announcement of extending loans for medical equipment purchases, stockists and so on. HTS hospitals are being funded for their investment in vaccination efforts. We have successfully activated the patient EMI HDFC and DC credit card, debit card programs at more than 200 hospitals. On the retail branch banking front, HDF. We focus on launching the unique initiatives that take need based selling to the next level.
Immediate Next Best Action is an artificial intelligence tool HDF that studies the customer transaction patterns and digital behavior and is able to correctly pinpoint the financial need of the customer in the contextual relevance to suggest product and timing. HDF. It provides real time figures to the RMs on customer transaction patterns and digital behavior. The initial trends are very encouraging with a 6x HTS. Higher probability of the customer to take the product based on analytics than the traditional process.
One of the significant digital enhancements that helps in greater HTS. Customer service is a walk out working journey. This is a revolution in servicing the needs of the customer. It aims to make servicing of the customer instructions paperless the use of Bitly Link and 2 factor security authentication even if the customer is not active on the network banking. Paperless Journey was recently launched for a few of services and in due course time, it will cover many more customer instructions.
On the digital front, I want to give an update on the digital front. UPI transactions HTS. By count, both P2P and P2M in aggregate have sequentially grown 5% HDFC.7 core transactions and over the prior year it has gone up by 2.4 times. On a similar basis, HDFC. And over prior year, it has gone up again 2.4x.
For the quarter, in terms of the value, Our P2P market share is about 10% and P2M market share is about 14% around the UPI. HDFC. Mobile Banking and Net Banking users have grown year on year by 31% and 21%, respectively. HDF. Transactions count has seen a growth of 103% year on year on mobile banking and 39% for net banking.
HDF. We continue our focus on telichannels for service sales and relationship. During the quarter, telesales channel grew 400% in business over Q1. Understandably,
with a
lot of lockdowns and this channel is the only active channel that on a remote basis could be easily HCL operated, relatively easily operated. On the payment business, the bank has got 14,900,000 cards and floors, HTS. Right, at the end of June, with the market share for cards and floors at about 23.8% May number, right, slightly dated May 21 number. HDFC. Bank share in receivables stands at about 56%, right?
The market share in issuing card spend stands at 28.5% as of May 2021. HDF. Within issuing spend, the bank analyzes the retail spend separately, which caters to a large customer base, which the bank has managed to build over the years and the bank continues to focus on deepening the relationship. The data coming from the network franchisees, HDFC. Our spends per active card for the bank is 1.4 times higher than the industry.
Average ticket size of the transaction is 1.2 times higher than the industry, HTS, which reflects the strength of the franchise and the depth of our customer relationship. In retail spend, we've grown HDFC. 33% year on year, right? And lower numbers of credit card customers are now revolving. So the revolving balances are down, right?
Because understandably, Junit will probably talk about our credit actions and understandably in the market, HDFC. There is a shyness as you see that card spending is down overall, right? As given the prevalent trade scenario, bank is cautious HTS in extending the credit. Another important information, while we look at retail spend HDFC. As opposed to a total spend, which is the retail spend plus the business cost plus the commercial cost, that's what many people in the market see HDF based on published data.
But we analyze retail spend separately. There is a reason why retail spend is more important. HDFC. About 3 fourth of the bank's credit card customers hold a deposit with us with aggregate balances amounting to 5x the card outstanding. HDF.
That's the 5x card outstanding is the deposits that are made available to us by the card So it's very important to analyze the retail spend and the retail card relationship as opposed to a generalized total card spend and the total card relationship. HDFC. Merchant Acquiring. The bank has 2,300,000 acceptance points as of June with a year on year growth of 24%. HTS.
Acquiring business volumes including credit, debit, UPI, direct pay for the bank grew by 75% year on year for
the quarter ended June. HDFC.
In this time of social distancing, the bank has continued its focus on digital payment solutions of various other various payment factors. HDFC. As per RBA data, previously I was quoting certain things on retail spend through the franchisee data, HTS. Through the RBA data now on acquiring, the bank's acquiring market share for April stands at 50.5% versus 44% HTS in April last year. On the retail assets, our book grew by 9.3%.
As in Kapil will talk a little more in terms of how where we have gone through in the quarter and how we are picking up momentum on that as we are coming out of the Wave 2 HDFC and how we are strengthening the digital solutions for customers on that. On the wholesale segment, paydowns have increased during the quarter as corporates deleverage. HDFC. However, the bank continues its progress in gaining market share due to diligent adherence to sales process. HCL.
Wholesale credit growth largely from PSUs and we continue to provide liquidity to quality and relationship based MBSCs HDFC. For ON Lending as well as for PSL, Jimmy will allow you to a few things as we go. Commercial and Rural Banking business largely impacted in April May HDF due to localized lockdowns but picked up in June. We will have Rahul and Shukla talk a little about how that's coming along now. Collections, as we mentioned, were mostly stalled with the advent of wave 2 COVID HTS.
It was picking up in March, but from April May, it stalled that momentum of pickup that we were seeing. This is reflected in the bank's portfolio as we said, severely contained collection was closed during the quarter due to restrictions HTS of personnel on the field and both concern health and safety concerns of our staff as well as the customers. HDFC. I do want to cover a few sentences on the society and community. HDFC.
At its key ESG commitment, the bank pledged during the quarter, as you would have heard and seen, to become carbon neutral by HDF Financial Year 20 1, 2022. The bank has 3 pronged strategy to achieve its objective to become carbon neutral: HDFC's reduced consumption, transition to renewable energy and offset carbon footprint. The bank has set clear targets on its environmental and social responsibilities, which include improving the gender diversity ratio, developing a green bond framework and emission reduction targets. On the community front, HDF. The bank has set goals that are aligned to the sustainable development goals of the United Nations and will track progress on this front.
In response to the challenges brought forth for the 2nd wave of the pandemic, the bank has stepped up its work on upgrading health infrastructure facilities, HCF setting up ICU facilities, oxygen plants and distribution of nutrition and hygiene kits under COVID relief, An amount of INR 100 crores has been committed towards this. Now some kind of a balance sheet strength at a high level before we go into the HDFC. P. Vijay Kumar:] For details, COVID, as I mentioned to you, significantly impacted the franchise, but still about 1 point HDF. 64,000,000 new liability relationships were opened in the quarter and an increase of 40% over the same period in the previous year.
Deposit growth 13.2 percent, strong contribution from retail, which grew by 16.5%. Advances growth by HCF increased by 14%, 14.4% with a strong momentum and build coming from Commercial and Rural Banking, which grew by 25.1%. HTS. Liquidity is consistently strong at about 126 percent capital adequacy 19.1 percent CET1 HDFC 17.2%. We did build some contingent provisions during the quarter.
The floating and contingent provisions totaling INR 8,000 crores HDFC helps in derisking the balance sheet. We continue to originate loans in conformity to our proven credit models. We'll cover credit as we go. I want to provide once more context from people who joined late. So I'm going to give a context again and then get into micro details.
HTS. We'll get into details, but as I mentioned in the beginning, COVID-two had significant impact with people health concerns. HDFC. Various bank activities were curtailed for almost 2 thirds of the quarter. About 25 days to 40 days, we could count where HDFC.
There could be certain things that could be done, otherwise significant curtailment. Lower product sales, including retail asset bookings, HDFC. Reduced car spends and revolvers, reduced collection activities, in summary impacting interest income, slippages leading to interest reversals and provisions, etcetera. Code Wave 2 is behind us for most part HDF. I'm subject to hopeful of a benign COVID wave 3, which again subject to the benign COVID wave 3.
HTS. You see these are most parts timing or temporary. We see buoyancy. As we go in call, we will have our frontline businesses describe the current experiences in the market. Let's start with revenues.
HDF. Net revenues grew 18% to INR 23,297 crores, driven by advances growth of 14.4% and deposits 13.2%. Net interest income for the quarter was at INR1709 crores, which is 73% of net revenues. HDF. It is up 8.6% over previous year and a tad lower than 1% over previous quarter.
The core net interest margin at 4.1%, prior year was 4.3%, prior quarter was 4.2%. Net interest income sequential growth rate HDFC. P. Vijay Kumar:] This impacted by approximately 3 percentage points due to lower yielding asset mix, including lower card revolver balances, higher interest reversal due to delinquencies and a higher mandatory cash reserve ratio, which got implemented late March with the higher CRR. HTS.
Net interest income year on year growth rate is impacted approximately by 6 percentage points due to lower yielding asset mix, Recurring lower cards, yield and revolver balances, higher interest reversal due to delinquencies and higher mandatory cash flow ratio. HTS. Now moving on to other income. Total other income at INR 6,289 crores was up 54% versus prior year And lower 17% versus prior quarter, again the impact of COVID on a sequential basis. Fees and commission income constituting 62% of other income was at INR3885 crores and grew by 74% compared to prior year and is lower by 22% HDM.
Compared to prior quarter across various retail product lines impacted due to the activities of sales in retail, retail constitutes approximately 91% HTS. So impacted due to the activities. FX on derivatives income at INR 1199 crores was HTS. Higher than prior year and prior quarter, reflecting pickup in activities and spreads both sequentially and year on year. HDFC.
Trading income was at INR 601 crores for the quarter, prior year was at INR 10.87 crores and prior quarter was at INR 6.55 crores. Some of the gains from investments were monetized in line with our ALCO strategy. Miscellaneous income of INR 603 crores includes recovery HDFC from return of accounts and dividends from subsidiary. I'll cover some of these more on recoveries a little later. HDF expenses.
Operating expenses for the quarter were INR 8,160 crores, an increase of 18% over previous year. HDFC. Year on year, we added 327 branches, bringing the total branches to 5,653 as of June end. We opened 45 branches during the quarter. On an average, one branch every alternate day.
Many, many days HDFC. We're impacted, but still on an average, one branch every alternate day we manage to open. Branch opening has been impacted. We have approximately 100 and HDFC. The 3 branches in various stages of readiness should be open soon as things improve.
Since last year, we added 1295 ATMs cash deposits and withdrawal machines and 204 during the quarter. As of June end, we have 16,291 ATMs HTS and our cash deposits and withdrawal machines.
We have
15,687 business correspondence managed by common service centers, HTS, including 131 opened during the quarter. The staff count increased by 7,651 during the last 12 months and is at HDF 1 lakh 23,473. During the quarter, we added 3,380 staff. HTS. We brought them on board.
Cost to income ratio for the quarter was at 35%, which is similar to prior year level. HDF. We anticipate the spend levels to increase driven by incremental volumes, sales and promotional and discretionary spends on investments HDFC. As the activity, particularly on the retail assets front, pick up. As we said in the past, the cost to income ratio will be reverting to 38%, 39% In the short run, once we are behind this COVID and the activities in the retail assets pick up, while our goal remains to bring this down again in the medium to long term.
HPO. Moving on to PPOP, the pre provision operating profit at INR 15137 crores grew by 18% over prior year. Now coming to some sellers on asset quality. The GNPA ratio was at 1.47 of the gross advances HDF as compared to 1.32 in prior quarter and 1.36 in prior year. G and P ratio excluding HTS.
NPS in the agricultural segment was at 1.3, prior quarter and prior year were at 1.2. Net NPA ratio was at 0 0.48 of net advances. Preceding quarter was at 0.4 and prior year was at 0.33. HTS. Again, net NPA ratio excluding NPS in agricultural segment was at 0.42%.
Prior quarter was at 0.39% and prior year was at 0.29%. The core annual slippage ratio for the current quarter is at 2.54% HTS. At against 1.66% in prior quarter and 1.2% in prior year. Excluding slippages in the agricultural We did have significant slippage even in the Agriculture segment in this quarter. Excluding slippages in the Agriculture segment, the slippage in the current quarter was at 2.2% HTS against 1.61% in prior quarter and 1.17% in prior year.
As you know, 2 thirds of our current quarter was impacted. That's part of what you're seeing here. We believe it will take next few months to get the missed collections to a regular schedule. HDFC. Sale of NPA, INR1800 crores in the quarter.
At the end of March, HDF. We had restructuring under the RBA resolution framework for COVID at about 60 basis points. At the end of June, HDFC. Restructuring 1 and 2 together is at about 80 basis points. On the provisions, the core specific loan loss provision for the quarter HDF.
We're at INR 4,220 crores as against INR 3,153 crores during the prior quarter and INR 2,740 crores for the prior year. Total provisions reported were INR 4,831 crores as against INR 4,694 crores during the prior quarter HDF3892 crores for the prior year. Total crores in the current quarter included additional contingent crores in of approximately 600 crores. HDF. The reported specific provision coverage ratio at 68% as against 70% in the prior quarter and 76% in the prior year.
HDF. There are no technical write offs. The head office branch books are fully integrated. At the end of current quarter, contingent provision towards loans were approximately INR 6,600 crores. The bank's floating provisions remained at INR 1450 as of June 30 HDFC and general provisions were at INR 5,300 crores.
As on June quarter end, total provisions comprising specific floating, contingent and general provisions HDF, where 146 percent of gross non performing loans. This is in addition to the security held as collateral in several other cases. HTS. Looking at it to another length, floating and contingent and general provisions were 1.15% of the growth advances as of June end HTS versus 1.10% in March 2021 and 0.99% in June 2020. HCF.
Now coming to credit cost ratios, the core credit cost ratio that is specific to loan loss ratio is at 1.46% for the quarter HDF against 1.10% for the prior quarter and 1.08% for the prior year. Recoveries, which I said, I'll mention it now, HDFC. Recoveries which are recorded as miscellaneous income amount to 14 basis points of gross advances for the quarter against HCL's 26 basis points for prior quarter and 9 basis points for prior year. Recoveries were also significantly impacted for most of the quarter, again the COVID impact. It will take few months to get to normal schedule to get the recoveries back on to track there.
The total credit cost for the quarter annualized, including the contingent provisions created, was at 1.67% as against 1.54% in the prior year and 1.64% in the 5 quarter. PAT at INR 10,306 crores grew by 15.3% HDF. Net profit at INR7,730 crores grew by about 16% versus prior year. Now some balance sheet items. HDF.
Total deposits amounted to INR 13,459 crores, an increase of 13.2% HDF over prior year and up 0.8% over trial quarter, which is an addition of approximately INR 1,56,000 crores since prior year HDF 11,000 crores in the quarter. Retail constituted about 82% of total deposits and incrementally contributed HDF 30,000 37 little more than INR 37,000 crores during the quarter, a growth of 3.5% sequentially HTS and almost the entire deposit growth since last year, 16.5% growth year on year. With our persistent focus on granular deposits, HDF. Tata deposits registered a phenomenal growth of 28% year on year ending the quarter at INR 6,111,801 crore with the savings account deposits HDF at INR 4 lakhs 26,000 crores and current account deposits at INR 1 lakh 85,000 crores. Current account increased by 24% year on year.
However, it declined by about INR 26,000 crores during the quarter, primarily because of wholesale sales. Savings account grew 30% year on year HDF, little more than INR98,000 crores and sequentially grew by 5.6% or little more than INR 22,000 crores. HDFC. Retail constituted about 88% of Casa deposits. Our time deposits at INR 7,034,000 crores grew by 3.1% over previous year and 2% over prior quarter.
Time deposits in the retail segments grew by 6.6% year on year and 3.7% sequentially. Time deposits in the Wholesale segment decreased by 7% year on year and decreased 3% sequentially. Our capital deposits comprised 45.5% of total deposits as of June 30. Credit deposit ratio was at 85% for the quarter, which is same as what it was in prior quarter. Prior year, it was at 84%.
HTS. Now getting to advances. Total advances were INR 1,747,652 crores, HDF, an increase of 14.4 percent over prior year and a sequential growth of 1.3%. This is an addition of HDF approximately INR 1 lakh 44,000 crores since prior year and INR 15,000 crores during the quarter. As per internal business classification, HTS.
Retail loans grew by 9.3% over prior year and we grew by 0.7% compared to prior quarter. HDFC. Commercial and Rural Banking loans grew 25% over prior year and grew by 3.9% over prior quarter. HTS. Wholesale loans, other wholesale loans grew by 10% over prior year and grew by 1.5% over prior quarter.
HTS. Maybe Jimmy Tata can give some color about the growth in the loans and the situation on the credit front. HTS.
Sure. Thanks, Shneesh. Hi, everyone. Thanks for coming this evening. First, just go through a little bit on the HCL.
Details I discussed the credit philosophy strategy and the portfolio management. I'll come back a little later for the SME and Commercial and Rural Banking on the corporate side of it. So I think Sriniv HDFC. Alluded to it already, so I'm not going to talk too much. But yes, this has been a quarter where things were not HTS.
In the last couple of quarters, we were talking about how the moratorium exit and the recovery of most portfolio is up by December and past the last of them by March, and we were pretty much back to the pre COVID levels. So that was all very encouraging till the 2nd wave hit sometime in April. The effective impact of this HDFC was of course our business, which I think Kaizen and Rahul will have a little to say in a minute, but I'll just HTS. Get on to how it impacted the portfolio. We found ourselves and our staff HTS getting infected quite rapidly.
So we took a decision to put safety first and we stopped going out on recovery calls, etcetera. Most of the work that was done during those 2 months was actually on the phone, work from home and all that. So I'll come to the impact in just a few seconds. But it's only been in the month of June that we really have had the ability to start going out. This is all despite the lockdown.
So where there are restrictions, we We still cannot do it. I'm only talking about the self imposed restrictions over and above the other restrictions during the 1st 2 months. HDFC. That said, I must say that the 2nd wave, 2, 3 differences between the 2nd and the first wave. HTS.
The 2nd wave financially has been less severe. Health wise, of course, has been much more severe. HTS. If you look at policy, not national policy as compared to the 1st wave, again, there was HCF. More of a prioritization on the health and safety initially, and I think that it has been more HTS.
P. Vijay Kumar:] Selective in terms of not having nationwide lockdowns, etcetera, in the 2nd wave. So all this resulted in the financial impact not being as severe. The peak bounce rates, for example, has been lower than the first wave, etcetera. So that's the kind of backdrop in which we worked around.
Could you just give 2 or 3 macro indicators on How things have dipped and then come up again because you'll see this moving as a kind of common theme to everything that I go in.
HTS. So if you look at
the Google Mobility Index, it tanked very badly as one would expect in April May, Very good recovery in June. And by the time we sit now almost on a daily basis in July, it's virtually recovered to back to where it was before. So that means like something like a March April level.
If you look at the
e way built in, now these start sending slightly mixed signals. The third one will Send an even more mixed signal to you. So the year bills have been on the increase again. You look at June over May, again, much higher, but still you are below the March levels over there. So that's not as good a story.
And if you look at the Purchasing Managers Index, HTS, which is a good indicator of actual activity as it's happening. That has lagged expectations month on month hasn't really panned up. So as I said, the macro signals also a bit of a mixed bag out to you. So let me get now straight to where we stand. HDFC.
The bounce rate essentially has held up in the portfolio. If you look at the 0 DPD HDF bounce rate, which essentially means people who are not in default on the date of the presentation. It has actually reverted back the pre COVID levels despite the hits that may have happened in April May. If you look at the overall bounce rate, it hasn't gone back to pre COVID levels, but there has been a pretty good recovery in the month of June. And if we go a little further into the month of July as well, there is a further recovery.
So I think the trends on reversal and the speed of exit out from this are relatively encouraging for us. I'll add that this is across products and it essentially signals and I'm putting this bounce data out because it HDF. Essentially signals that the inherent quality of the portfolio has not changed. And it is the safety oriented decisions HDF. That could have had whatever impact that has happened over the 1st 2 months and the reversal trends seem to be quite strong.
I must also put this bounce in context with the rest of the industry. If you look at the NASH data that gets published,
HDFC Bank.
You will notice that HDFC Bank has consistently had 50% HDF. Better bounce ratio. And this is quite consistent. It was there even before COVID and it remains there after COVID. HTS.
So the space in terms of the bounce data remains intact, which once again reinforces to us at least that the HDF. Inherent portfolio quality has not been very badly affected. But now let me move into the demand environment. So here what we are talking about is we define this HDF presentation of a particular month collected and recovered during that particular month. HTF.
This, of course, through May April, as you will understand, slipped quite badly because we refused to go out. Although demand resolution is, of course, an early bucket, I think that we do have a lot of HDF's augmentation that takes place, and we do need people to go out for it to last 2 or 3 percentage points. So it did suffer in the month of April May. There has been a bright, if I can use the word, recovery In the month of June, and I think the early periods of July continue to bring that particular point out. HTA.
So here we are not really back to pre COVID levels, but we are well on the way back to at least March kind of level and March had almost caught up with the pre COVID level, may have just been a percentage shy or so. So in that sense, HDF. The best way I can indicate to you. The team does believe that over this quarter, they will have HDF. In addition, There were high levels of infection emerging in the team around April and we obviously stopped performing.
HTS. And that's why we stopped. We got a lot of people vaccinated. So it's not that we have compromised on the safety standards at all before moving out again. HCF.
There has been a high level of vaccination. There's been a high level of so we got people actually back into the offices even for the calling, etcetera, and So I think that this is relatively temporary and will reverse. HTS. While I'm saying that, I think there is one product line where I should point out a non COVID impact item because we keep talking about how COVID has impacted things. HTS.
The commercial transportation has been hit by the diesel price hikes. And our previous experience also tells us that it usually takes a HDF. P. Vijay Kumar:] Couple of quarters for people to manage to pass on these price hikes and cost hikes on to their customers. HDF.
We expect in the current quarter, meaning the June September quarter July September, sorry, that HDF. A fair amount of that would get passed on. And in the quarter after that, particularly with the help of the festive season, I think HTS. People would manage to bring things back on an even keel by passing on these increased costs. But this is an aspect where we will need to look at the developments in that particular product.
I think Srini touched a little bit on the restructuring in terms of where the levels have moved. HDF. I'd like to say a little bit on the restructuring in terms of how we have gone about it and how we are continuing to go about because there is still some window left and I would expect a large part of the restructuring to take place before September. HTS. We rolled out across various platforms to make it as convenient as possible for people to apply.
HTS. There have been a minimal benefit of this in Q1, and we would expect to see some more of this in Q2 because we again had barely a month or so after the rollout to actually try and facilitate this. How we are going about this essentially is and because these questions do arise in people's mind and we do get asked as well, so might as well say it HTS. We do not restructure if liability is in doubt. We will HDFC.
Take the pain and we will decide to move on with that. If people have lost jobs, HDF. We do take a slightly comforting view on this because most people who did lose their jobs would manage to regain employment as soon as there is some sort of HCF revival and there are times now that things are reviving. So once again, one would tend to restructure that kind of a loan. HDF.
We noticed that there are a lot of people who are, while delinquent, staying in the same bucket. What this essentially means is they are managing to pay their monthly installments, But I'm not being able to reverse the trend and catch up by making multiple installment payments. Restructuring here again seems to be relatively HDFC. Because the ongoing cash flow seems to be in order. And so these are some of the just to give a little bit of an indication because we do get assets, HTS.
What we do and what we don't do. So I think that's perhaps the best way I can do it. It's much more complicated than this and it's much more case specific than this. So HCF. Please don't take this as some very simplistic or product program driven method.
It's rather detailed. But just to give everyone a flavor of what we do and what we do only. HTS. I think the and of course, going behind our mind is the fact 2 things which I'll come to a little later. I think one I just did touch HTS.
The bounce rates holding up and therefore the inherent quality of the portfolio remaining good, we do feel encouraged to be HCF. And we should in this environment be more compassionate and empathetic towards these kinds of things. But we do feel encouraged to do this on a commercial HDF level as well because of that. I think the second part to it is we and I'll come to this a little later, the new portfolio HDF. Definitely holding up and have a better quality than the historic portfolio.
And that said, it's not such a new portfolio anymore. I've HCF. I've been talking of the new portfolio itself now for 3, 4 quarters. So it's reasonably seasoned by now. Solutions now.
So I spoke of the bounce, the demand, and now we're moving to the collection resolution. Here again, it's pretty much the same story and a little more exaggerated because Those particular buckets depend much more on physical movement, which as we said was hampered. As soon as we got back into the HDFCL again, the recoveries have been quite sharp. If you look not just at June, but if you look at early July and we HDF. Compare the early days with the early days of several preceding months, it's once again even more encouraging for us.
So HCF. The Health First decision that we took is likely to get reversed by the end of the current present quarter in which we are in. HTA. I think this goes across products and across buckets. So HDF.
There's nothing on the downside to put out over here. I must point out what I spoke to you about June about July might be a little It's too early because there are very few waves, but the overall trend does remain in that particular direction. Recoveries, again, the same story, HDF. June better than May April and in pretty good measure, if I read some of the product There is data over here, which we don't really put out in public, but significant improvements June, over May April over there HCF compared to the 2 previous months. In July, once again, looking more and more encouraging.
So I think that kind of covers one part of the portfolio management, Hintel. And you'll have seen a kind of theme over here that April May were problematic because of the decisions that we took. Good recoveries across the board in all these things Over the month of June, looking even brighter for the whole part of July, we have covered up till now. I think the The decision that we took therefore does seem to be vindicated. The portfolio does remain inherently correct and strong.
HDF. And I think the decision that the bank took was very timely. I think it prevented a lot of lasting HDF. P. Vijay Kumar:] Vijay Kumar:] Again, Srini referred to the sale of assets, and I'll just add A little more on the operational side of that.
So yes, as you mentioned, around 1800 crores this quarter, If you recall, it was a risk a short of 1,000 last quarter. HTR. My reason for putting this out just now is that this is going to be consistent activity of the bank. HCF. I don't think it is also going to be a very standard value every quarter because the way it is computed is not To make it a regular feature, we evaluate the portfolio during each quarter, and we take a decision as to HTS.
Whether we believe we can have a more efficient collection through our own efforts over time or whether we should take the money available instantly HTS and close the particular account. So each quarter, the amount that we sell depends on what we HDFC. P. Vijay Kumar:] We are emerging in those. These are rather detailed exercises that take place virtually at a case specific level, even for smaller granular retail assets.
So I think I just should put this HTS. With regards to collection at that time. That kind of puts straight to the portfolio management, I'll just take a few minutes in terms of The policy and what's coming through the door right now, but I'll hand over to Ivan to really complete that piece. HCF. If we look at Bureau inquiries, you'll see you will have noticed that across the industry that Bureau inquiries are going up over the last few months, but HDF.
Pleased to report to you that it's going up at a faster pace for us. That, however, is quantity. So let's get on to quality. HTF. Within what's going up in terms of inquiries, the share of HTFC Bank in these inquiries for the HTS.
Better rated euros cost, if you take a 750, 760 kind of level, which everyone considers If you look at what's arriving in for HDFC Bank versus the rest of the industry are inquiries, HDFC. In every single product, you will see that there is a higher level of interest in HDFC Bank amongst the better HTS Credit Rated Retail Borrowers. Typically around 50% better, but There is a large standard deviation across products for this. So I don't want you to think it's 50 across every single product. HDF.
But this once again is encouraging from the point of view of the quality of these inquiries coming in. The proof of the pudding is obviously in the disbursement. Inquiries are inquiries. So happy to report this the same story over there. HTA.
Compared to the pre COVID times, I think in every single product we've got, we don't put all this data out in public, HDF. But significantly, 33%, 40%, 50% better penetration into the highest cost across these. HDFC. While I'm saying all this, I do want to emphasize that the reason I'm comparing to Guro is only because it's HTS. The only way we can make a comparison, we do much more than the bureau.
For the bureau itself, we use multi bureau analytics. HTS. We have our own algorithms. We do a lot beyond we have trade level diagnostics that we put into. There's a lot more that goes into it.
HTF. My speaking about the Bureau of Comparative is only for that purpose to give you a comparative. It's not really reflective of all the work that goes into our portfolio. I think I mentioned HDF. Every single band of euros core, we would have a better than average HTS portfolio performance in that sense.
Do I have anything more to tell you? I think the other piece is industry comparative on delinquency, nothing very different to report from before. Across products, there is a significant differential between our delinquency and that of the market and the fundamental story of HDFC's industry leading delinquency numbers remains over there. And I think that's all I HDF. I wanted to speak to you except that, yes, I alluded to it a little earlier.
The yearbook is holding up well and that Obviously, encourages us to move into a growth phase as the economy hopefully now turns and we don't HTS.
We don't have too much of a
3rd day coming on or anything like that. We will we are well prepared for these type of things. But I think that's all I want to put out right now. And HTS. [SPEAKER SRINIVASAN
VENKATAKRISHNAN:] Yes. Thanks, Jimmy. Very good evening to all of you. HDFC. On retail assets, let me start by giving you guys a quick sense from the last quarter.
I think despite the 7 to 8 weeks of mobility restrictions across various states, I can fairly say that our teams We addressed customer needs through our contactless and digital lending solutions, which we beefed up after the last lockdown. HCL. The results, of course, the retail asset portfolio growth is showing around an 8% approximate over the June last year. If I had to give a sense, during the same quarter last year when there was a kind of a severe lockdown, Our retail assets portfolio actually degrew by 3% to 4%. However, owing to the kind of agility and investments in contactless digital dispense HDF Cross Retail Asset Products and the capabilities that we've incorporated, the portfolio has kind of held on, But also been able to sequentially grow the portfolio very marginally over the March 31, 'twenty one.
HTA. At this junction, let me take a minute pause and give you guys acclimatize you exactly with what's happening In the month of June, give you a quick sense on whatever data there is on at an industry level. So if I were to look at the Bureau data At an industry level and look at the demand for retail loans in the month of June 2021, it's almost restored presently to 80% of the Jan to March quarter, quarter 4 of the last year, which is I think I would rate it as an encouraging sign. HDFC. At the bank, we have witnessed a very sharp bounce back in the demand for most of our key products, whether it's auto loans, unsecured loans, HTS Loans Against Property and Home Loans.
If I look at the industry data also on the vehicle side, to give a quick sense HTS. Because that's more precise as a reflection of the economy. If you look at the Sian data, auto loans from quarter 4 HCF of last financial year, which is Jan to March. And if you look at the last quarter, It's a decline at an industry level of 31% and 2 wheelers down to 41%. And I think on both the businesses we've gained, I have reason to believe we've gained substantial market share.
Now with our portfolio mix, I do believe We probably have a fantastic opportunity hereon to scale up both on top line as well as yields. In the unsecured loans, which is personal loan and business loans, we do believe we have a leadership position and we intend to capitalize this loan delinquency portfolio HDF. With the increased sourcing contribution from higher income customers and that's already substantially showing an improvement HTS. P. Vijay Kumar:] We plan to focus a little more aggressively on certain segments, Especially like the government segment.
In auto loans, like I just mentioned to you that in the last quarter, we have reason to believe we've gained a decent market share HTS in the 4 wheeler segment. I think we are edging towards the leadership position which we like to capitalize over this financial year, both in new cars as well as used cars because I think that gives a semblance of a better ease as well. In Mortgages, Homes and Loans Against Property Businesses, we are originating and growing faster than the previous years. HTA. If I were to take any insights and share with you for the 1st 15 days trends For the month of July 21, HDFC Bank is echoing the projection of almost 100% of pre COVID levels on the disbursement.
And that gives me the optimism that the quarter 2, which is July, August September, we should be in a position to scale up HTA rapidly on our growth rates. It also gives us the confidence that the plan set for the financial year, Which we had envisaged during our original assessment before the surprise second COVID wave hit us, HDFC, in my view, should remain unaltered. And our assessment and our belief is that we should be back on course to achieve the original financial year plans And should close the year on a solid growth for the financial year.
So I
think that should probably give you guys a sense on how the quarter was from how I see HDF. The financial year. That's all, I think. Thank you. Okay.
Thank you.
Jimmy, you want to talk about commercial? Yes. Yes.
Sure. HCL. So this will be a little quicker than the retail one because it's relatively steady and boring. So a few quick words on the SME portfolio and then on the corporate one as well. To point out just one thing on the SME portfolio, I think HTS.
The second wave was something that impacted customers quite a bit and then I give you a few details That said, the portfolio has held up And I really want to thank our customers, I think, for the kind of diligence, integrity and HDF.
P. Vijay Kumar:] States that they
have shown, I really think that they have worked very, very well to keep their businesses well and to keep their HDF credit quality intact and I think a large part of the credit for the portfolio success must be given to our customers right now. HTA. When it comes to a few headline numbers, we monitor, As I mentioned earlier, the delinquency in various buckets, HDF. Every single bucket per delinquency numbers are actually improving quarter on quarter, which is quite Surprisingly given what happened during the last quarter, but it has been there. We have a 7, 15, 30, 60 pre NPA bucket that we look at and HCF.
It's actually improved quarter on quarter in each of those buckets. And that's why I really want to hold out for our HTS. I think another thing one must put out for them is if you look at the utilization, HTS. Despite the stress they must have faced the average utilization remains range bound in 70% to 75 percent of the limit sanctioned bracket, once again showing that people are not drawing down from us just to HDFC. B.
Balaji:] Fund out losses are doing things like that is remaining very steady now for several quarters. So HCF. Very, very gratifying to see the quality of customers that have come to our bank, and it's HTS really holding us in good stead at this point in time. Nothing very different than usual to report in terms of The portfolio distribution, extremely granular, everything under 5%, every single industry, HDFC. Except, of course, for the agriculture where there is directed lending and we are required to take higher shares, which is around 10% or so of the SME book.
HTS. When it comes to the delinquency trends, I just mentioned to you that it's moving in the right direction HDI. While even during the pandemic, I need to then tell you a little on the incremental HDF. NPAs for the quarter have actually been lower than those of the previous quarter, which probably not surprising given the HCF earlier delinquencies trends I mentioned. And the gross NPA levels also remain
HDF's very range bound.
And we have been with few measures that we have to monitor the HDF. Yes. So just to give a slightly futuristic view, the self funding ratio I've been talking about over the last few calls, HTS. So I'm not going to describe it again. Once again, holding out very steadily between our 67% to 72% kind of range.
Collateralization of the portfolio again is rather high well into the 80s, mid 80s. HCF. That's if you look at the exposure, if you actually look at the outstanding on the drawn limits, we are more than 100% collateralized on the SME book. HTS. The other thing that we monitor individually on all our customers is the net credit.
HDF. Now the average net credit into the accounts obviously had dipped in April May and it has moved right back HDF. There's an actual mean reversal by the month of June and we expect July to be even better. So one more HTS. We also follow the GST trends the portfolio and how that matches into the cash flows into the accounts.
Once again, very strong correlation and this has been going on for several quarters. The behavioral score, HCF. As you will know, I had mentioned sometime back that we have this 1 to 10 behavioral score based on HTS. Several attributes. These aren't really to be linked to delinquency because these are non delinquent customers.
But we look at HDF. Cash flow rupee in relation to business, the banking habits, the manner in which the operations are carried out HCF. And all such things. So it is actually a behavioral score. It is not a credit score.
Those did take some sort of a dip in HCL. So that's about it on the SME book. HCF. Small update on the GECL. As you know, GECL 1, we were kind of market leaders.
HDFC. GCL-two and 3 were for the stress sectors, so we don't have that much out to those sectors. HTS. But even what we do have out in GCL23, I would regard not even 10% of that book to be in any kind of HDFS. It is mainly for people's business growth and opportunities.
So that kind of puts faith to the SME I wanted to speak of. I think the corporate is even more stayed and steady. HDF. We retained the kind of portfolio quality that we have. Growth in the corporate assets, not as HTS.
As strong as many previous quarters because we don't change policies, we don't change credit judgment. And what happens, if we found HTS. A few of you are in a particular quarter. That's what we would do. But the book remains very strong.
I think now it's been HDF 5 or so quarters where it has been range bound into our internal rating of 4.3, 4.4. HDF. I do always mention and will mention today also that there is considerable headroom in this Particular borrower grading before it even moves out of AA kind of range. So if it were to move into a 4.5, HTS. 4.6 and I'm not going to give you the actual number, but it goes well beyond.
You would still see a very strong portfolio. HDF. The unsecured wholesale portfolio is 3.5 rated portfolio on an average. So here, HTF. That's all I have to say.
I think external ratings, if you want a benchmark, I would think HDFC. If you look at the AAA and AA portfolio, it could probably be close to 80% of the book And at least 50% of our book is on an HTB 1 to 4 rated scale. So things are all right. No big slippages to report, nothing of that sort. So things are HDF.
Happily boring in both these segments for us, so we don't have too much of a problem. Nal, you want to talk about the business part of this? Sure. I'll try and wrap up quickly because I think we are horribly over time. Commercial and Google Banking had an end of period growth in total assets of HDF 24% Y o Y and 4% quarter on quarter.
While well below what I believe to be the potential growth rate of the underlying businesses, HDF. It was achieved under limited activity in the 1st 2 months of the quarter. The business broke out of historically low quarter on quarter growth rate HTS for the June quarter where it had ranged between plus or minus 1% over the last 3 or 4 years. On a sequential averages basis, growth was 6.5 percent over March quarter average providing strong earnings momentum. As we look ahead, given the opening of economy and the normal seasonality effect, HDF.
Growth outlook is better in both the September December quarters. Barring 3rd wave of impact, each of the businesses are expected to do much better in the current quarter. HDF. Within CRB, our mid market segment, while being fully self funded, saw a 25% Y o Y growth and 8% quarter on quarter growth. On a quarterly basis, we saw credit off take across a broad spectrum of industries such as metals and mining, manufacturing and engineering, HTS Auto and Ancillaries, Agri Food, Beverages, etcetera.
Growth was from both existing and a very strong new to bank client addition. HTS. The business remains on track to expand its footprint over 100 cities by the end of the year. We see growth in CapEx demand in sectors such as steel, textiles, chemicals, durables, HPF Paper and Packaging, Food Processing, Tractors, etcetera. Impact of lifting of moratorium has been neutral in this business.
Our business banking or wholesale SME business saw an asset growth of 33% y o y and 4% quarter on quarter and remained largely self funded. HCF. To be honest, I had higher expectations out of this business. We saw record customer acquisitions when you look historically at the June quarter. HTS.
New NPA creation remained at a flat run rate to last year and saved 50% lower than probably 2 years ago. HTS. Overdraft utilizations were at 70% while exiting June. Our Emerging Enterprises Group, our retail SME business, HDF. We feel very good about this portfolio, which pretty much went through an Agni Pariksha last year.
HTS. If you recall, in May 2020, the MSME sector had a 13% cap capacity utilization nationally And still our portfolio has come out completely unscathed. Our Transportation Finance business, a mix of working capital and EMI businesses remained flat over prior quarter, HTS, which was a strong quarter, the March quarter and about 8% up y o y. Markets were opened largely in June when aggregate volumes of HTS. Commercial Vehicles, Construction Equipment and Tractors increased 109% in volumes in June over the month of May.
HDFC. We increased our volumes by 160%. As a result, our June market share in MHCV was 29%. HTS. We remain muted intentionally on LCV and ULCV segments, but increased our attractive market share to slightly over 5% from below 5%.
HTS. Q2 should be steady with manufacturers expecting pent up demand for Q2 on the back of low sales in Q1. In Construction Equipment, The indicators are quite positive with machine usage having improved to 42.5 hours per week for backhoe loaders and 31.7 hours for excavators mid June, which are peak levels of last financial year. With the focus of government on infrastructure, road and mining segments, this segment remains poised for growth in the current quarter. Our large in market share but small in size Healthcare Finance business saw a quarterly decline of 4%.
Hospital overdraft utilizations came down drastically with very strong cash flow during the last quarter. Since March 2020, elective surgery is down by almost 50% And government settling receivables promptly led to negative working capital requirement in the sector. Lastly, our Rural Banking business had approximately 19% Y o Y HTS. Advances growth and a minus 2% quarter on quarter growth. Negative Q o Q is the normal trend, but it was lower than past HTS because of granular disbursements.
While sowing is delayed in some parts, it has not derailed. With delayed sowing in certain areas, related credit HDF postponed from June to July. We have a strong outlook for the current quarter. Collections were impacted in early part of the quarter but are on in full swing since HTS. This is a different collection cycle given interest and repayment dues of last three half yearly cycles, which is March HTS 20, September 2020 March 21 have accumulated and are being collected.
The impact of Cyclone Tautei, which impacted 4,006 HTS 119 villages in mid May is also under observation, though it does not appear to be a major concern as of now. Thank you.
HTS. Thank you, Rahul. A couple of lines on cash buyer. Capital adequacy, we have reported that Basel III guidelines stood at 19.1 Centers Against Regulatory Requirement, which was 11.075. Prior year was at 18.9.
HTS. Tier 1, RUB 17.9 compared to RUB 17.5 in prior year. You know that the bank declared dividend rupees per equity share for FY 2021 that had been reckoned in the capital ratios. HDB. Now getting to wrap up on HDB, a word on HDB before we go.
The business sales in the quarter showed a growth of HTA. 66% over prior year, because prior year was hardly anything, but it is down 54% over Q4. So again, significant impact on COVID. The AUM stood at INR 59,368 crores. Net interest income for the quarter INR 9 HDFC.
64 crores or drop of 10% over Q1 last year. PPOP for the quarter at HDF INR 6.44 crores, a drop of 15% over previous year and 35% sequentially. Provisions were INR 4.72 crores And the profit after tax in HDB was INR 131 crores. HTS. Again, the delinquencies were significantly impacted.
We'll have a couple of minutes from Damesh to talk about that. HDFC. As of June end, the gross NPS per NBST recognition methodology was at 7.75%, prior quarter was at 3.89%. HTS. Ramesh, you want to talk about 2 minutes about a few things on MESH TV, please?
Sure. I think as compared to what the bank does, we HCF. And I think the challenge or the I mean a feature of the segment is that HDFC. When there is a problem, it shows up immediately, unlike a prime customer where he might have some savings, which he can continue to service his loans for some more time. The customer segment that we service the problem show immediately.
So I think that's what you kind of see in this quarter. HCL. So it's a good in a way also because we're not we know immediately what corrective action has to be taken. And one of the challenges, I think, for last quarter was that HDFC. In some markets, including some large markets, MBS is not considered either exempted or essential.
So we actually have to keep our branches shut or We have to keep our branches open for barely 1 or 2 hours a day. So that impacted collections and putting feet on the ground. HCF. So we did postpone quite a bit of normal collection activity, including auctions that we might have done of HTS. Collateral that we normally can quickly do and collect.
We have not done any asset sales or any Restructuring in the last quarter, again, we like to see some cash flow before we get into any restructuring activity. I think some of the work that we did last year did show up In very positive momentum with customers in Q1, Q4 last year, but we will see how this quarter pans out. I think we are quite hopeful. I think the last 10 days of June early July look much better. And just like problems show up quickly, they also get addressed quickly because customers like to come back on Roy.
So that's Namal. Srili? Thank you. I just want to add a couple of more HDF. Matters in terms of the liquidity remains pretty strong at over 200% and ability to borrow at attractive rates even now.
HTF coupled with strong capital position, which is close to 20%, as you described, well positioned for market opportunity. HDF. With that, we can summarize, but I do want to give one last shout out to the staff. Despite all of COVID Complexities for most of the quarter. Our teams across functions enthusiastically handle customer engagement in implementing our strategy.
We do need to give a shout out of thanks to all of them. And with that, we may request the operator to open up the line for questions, please.
HCF. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. HTS. First question is from the line of Marukhatrajania from Elana Capital.
Please go ahead.
Yes, hi. My first question is on slippage. HCF. So just to clarify, the absolute value of slippage would be around RMB73 1,000,000,000 of which around RMB9 1,000,000,000 would be agreed. Would there be a further breakdown into SME unsecured retail, if possible?
HDFC. And also what is the total quantum of standard restructured books in HDB Financials?
Okay. 1, the numbers that you quoted are right, but the breakup Further breakup of the slippage is not something that we have published, and so I'm unable to provide that. In terms of HTB restructuring 2.0, Ramesh alluded to say that there was no restructuring done in 2.0. HDFC. The team is evaluating to see looking at the cash flows in terms of what can be done and when it should be done.
Sir, was there any restructuring last year? Like what is the restructured book, the existing restructured book of HDP?
HTA. So last year, we as of March 31, our restructured books stood at about
INR 3650 crores. And out HDF. About INR 120 crores was credit and paid as on March 31.
Okay. Thanks. And was there any slippage in the TLGS book in the HDFC Bank.
TCG is not material, Maruk. Jimmy here, hi. HCF. Not materialist at all. I can't I don't have data with me, but not materialist.
And just one more question. In terms of fee income, if you see the absolute value, it's lower than Q2 last HDFC. Yes, of course, because disbursals were also down, but probably they were not lower than Q2 last year. HDF. So would the I mean, would a substantial part of it also be because of cards?
It is HDFC. Retail assets also is there and third party fees is also lower, which is HDF. The distribution of the third party products is always up. It is a little nuts here and there across a few lines.
HCF. Thank you. Thanks
a lot. Thank
you. Next question is from the line of A. P. R. Nagar Shah from ICICI Securities.
Please go
ahead. Yes. Thanks for taking the question. So firstly on slippages, Can you just say in terms of since there is hardly been any restructuring, say, under 2.0, so how much could be of a technical nature actually because maybe compared to the earlier run rate when there was first wave, we had not seen this kind of slippages running through the quarter. So Just want to get some sense in terms of is there any technicality and we could see a good upgrade coming in the next few quarters?
HDFC. We would expect so. There is the slippages are elevated and we haven't been able to get to the market HTS.
To get the
collections done for most of the quarter, I alluded to 35, 40 days of where effectively we could do something. But HDFC. We do believe that and Jimmy also mentioned about the activity in a positive light late June, early July HTS. In terms of the recoveries and in terms of the action on the feet on street that's happening.
Kudal, hi, Jameer. HDF. So we do expect to have better recoveries in the current quarter. We do also HTS. And now looking at being empathetic about it.
So the recent RBI clarification that someone who has slipped, HCF, which at this date would have been recalled, will be upgraded as standard as well. If we found meritorious cases in those, that could also happen. But HCF. Essentially, it will be on actual recoveries and collections,
but we do expect that.
Sure. And in terms of restructuring compared 2.7% under OTR-one. Broadly, do we think that it can still be contained below it or maybe since it's not HDF. So what is the current assessment in terms of how can restructuring actually play out under 2.0?
HCL. So the way in which we would look at restructuring is has somebody had a temporary setback because of COVID. HTS. And that's the essence and spirit behind what we would really look at. If someone has had this sort of a setback, he would recover.
And if we do believe that he would recover, of course, within the 2 year horizon that has been given as a maximum by the Reserve Bank, HDF. We will restructure, HDF.
Okay. But any trends in terms of how can it be overall?
I'm sorry, I didn't get that.
No, sir. In terms of the trend, whether it can be lower, it can be higher, how maybe based on our early assessment out there?
No, I don't have any feeling right now as to whether it would be higher or not. It hasn't been there hasn't been a rush for it. HDFC. That's all I could perhaps say.
And when it comes up, it's a case by case basis more than any March HCF.
Shah:] Sure, sure. Thanks, yes.
Thank you.
Thank HDFCU. Next question is from the line of Abhishek Murakar from HSBC. Please go ahead.
Yes, good evening. Thanks for taking the question. HCF. So the first question is on cards. I just wanted
to check when you said that HDFC.
The interest income was about 6% would have been the interest income growth would have been 6% higher y o y. How much of that would have been because your card business slowed down? HDFC. Rather than looking at cards in isolation, 2 things. 1 is lower yielding asset mix and also contributed by lower card fees and revolver balances.
If you look at the balances, HDF. We grew cards from little more than INR54,000 crores to INR 60,000 crores year on year, right? But HTS. The revolving balances are down, right? While absolute receivables are up, the revolving balance customers are down.
So that means HTS. People have been cautious in revolve. We have cut back on credit lines or they have been delinquent over the last HDF. 12 months and didn't come here or there are restrictions, right? So under whatever circumstances, that's the contributory factor.
HTS. So, Srini, if we try to understand, let's say, of your total income, if I combine NII and fee income, HDF. What percentage would be cards? Just trying to get a broad sense. Can you give us just some sort of understanding over there?
HDFC. People have been asking us to produce cards, C and L and publish it. So it could be benchmarked with monoline card businesses, but something that's So we'll give a thought to your question about how whether we should publish the card C and L. We'll give a thought to it, but that's not something we have done. HTA.
Okay. Okay. Because separately, if I benchmark and try to calculate, it comes to a pretty huge number, which seems a little HDF. So I was just trying to get a sense, any kind of broad ballpark. It comes to about 40% to 50% of your HDFC.
Fee income, just the fee part, not the fund part. So just checking. What is the 40%, 50% you're already into? HDF. So just the card contribution to the fee, I know it cannot be so high.
So that's why I was trying to Card contribution to the fee, HDFC. That's in we've not published that I think in the past calls we have talked about. It could range from 25% to 1 third HTS. P. Vijay Kumar:] Depending on the quarter, about the robustness of how the other products like third party insurance products, seasonally could be quite strong in the March quarter.
HDF. At that time, the cost contribution can go down. In the fiscal quarter, think about the October, December quarter, the cost contribution can go up.
HTF.
So it can swing between 25% to 25% to that is 1 fourth to 1 third. We can think about that as a cost. And this you're talking about the core CEB, right, commission exchange and brokerage? Or you're talking about your total non interest income? HTS.
No, I was talking about the cards, fees and commissions. Yes, as a percentage of the CEB. Field income, yes, percentage on the field. Yes, sure, sure. And just any indication from the RBI in terms of their
HCF. No,
we are awaiting communication. HDF. I think we alluded in some other context or another call that the audit report was submitted and it's with RBI and it is receiving their attention. HTA. Okay.
And sorry, just slipping in one more question about restructuring. So under the older RBI scheme, HDFC. What we have shown, I think as of March, we published certain things, but most of it was I think relating to retail, the few which were non retail. HDFC. As of March, we have published.
The next publication we will do in that, I think, is required to be done by September, which we will do.
I wish the bulk would be retail on that. SME would not be very large. If you look at the relative portfolio sizes, SME would not be very large.
HCF. Okay. And just one data treating point. If you could break up the ECLGS into 1, 2, 3. Just broadly, that would be useful.
Thanks.
So HTS. No, what did you want EPLDS in terms of amounts?
How much was yes, in terms
of Yes. So EPLDS 1.0 is slightly over HDF. 30,000 crores. And 2.0 and 3.0 put together would be about 2,500 crores to 3,000 crores in all. HTS.
So that would be roughly 9% or 10% of the overall volumes. ECLGS 4.0, many of the customers of ECLGS 1.0 in our case, since they 1.0 in our case. Since they are not restructured and they don't want to be restructured, I think we'll have very limited or HDF. Pretty much nonmaterial negligible eligibility in terms of our portfolio.
But have they increased it to 30% of loan? Because if they do, that HDFC.
So there was a ministry announcement. There is a detailed announcement, I think, that should have come HTS from RBI. But what it requires is that when you go from 20% to 30%, you also have to restructure and there is a provision that has to be taken. HTS. That is at least my understanding.
So we haven't yet formulated even a policy looking at that because we don't think that prima facie our portfolio will HTS. I have a lot of demand or request and we haven't got inquiries. So if it comes, we will basically take a HTS. So every single one of the PLGS as it moves towards the stress sector, I think our portfolio, which was eligible or people who were going to take it, it just kept dropping by as I gave you the breakup between 1.0 and the balance.
HTA. Okay, okay. Perfect, perfect.
Thank you so much for the answer. Thanks and have a good weekend. Thank you.
Thank you. Next question is from the line of Shagun Varna from Goldman Sachs. Please go ahead.
Yes, hi. Good evening, everyone. This is Rahul here. HDFC. A couple of questions.
First is on the just data keeping, what was the write off of this quarter? HDF. Write off about INR 3,100 crores or so was the write off, annualized a little more than 1%, little more than 1 point HDF. Okay. Thanks, Srini.
What was it last year, Srini? HTS full year. Last year, I don't have it in front of me. HCL. Yes, the team will see if they have, but we'll come back, yes.
Sure, sure. Thanks, Suneet. The other question is on HDFC restructuring event. So the retail restructuring that we have, which is about RMB 55,000,000,000 or thereabouts, HTS. Can we get some color?
Is it more unsecured or it is on the consumption side or the commercial side HDF Retail which is less than 5 crore loans. So just wanted to get some color of restructuring.
All the detail HTA. Structuring split between unsecured and secured is like a twothree, onethree kind of split. Okay, 2:30 is on PIKI, if you call it.
Yes, yes, absolutely. Rahul, on the write off question that you had last HDFC. Same time period. A little less than half of what I gave you for this quarter, it was about INR1500 crores or so. Sorry, this is for the Q1 last year or I was not full year.
Correct. June quarter, June quarter. HDFC. And full year you would have it handy just in case? No, I think full year is published, I think.
Full year is published somewhere, yes. HDFC. We will get to you, but it is published, yes. Sure, sure. The other question is on the margins.
So just wanted to get some qualitative color. Clearly, I mean, of course, onethree of the operations were impacted in the previous quarter. So the impact that we may have seen quarter on quarter, Is it largely because of liquidity or there is
a pricing pressure also that we are seeing in the market?
The same three, four items HDFC. One is the asset mix that includes the card revolver balances. If you look at the card balances HDF. From around INR 64,000 crores, I think we published the card balances INR 64,000 crores last quarter. HDF.
This quarter, 60,000 crores, 60,500 or something this quarter, a significant piece of that reduction is the revolver balances reduction. HTS. So there are the revolving balances have come down. People haven't revolved as much. So that is the one significant contribution.
And the lower mix, right, because you see that the retail slightly contracted and the wholesale went up. So that gives you the mix impact HTS. So that is another one. And the higher interest reversal due to delinquencies, you can see that HDF. The slippages that we gave you at about 2.54% or little more than INR 7,000 crores HDF.
I do have insights on the interest income that you reversed out. And then of course, the other one is the managed free cash reserve ratio was Predictable and there's a loan one which expired late March, so that is another impact.
Got it.
HTB. Just one last question on HTB Financial Services. So the performance over the last, let's say, 5, 6 quarter has been so far. Now we understand the environment But what really is the game plan here? The ROEs have been sub par, the Tier 1 has been around 13%, 14%.
So will we need to infuse capital in that? Or how are you thinking about that business now? And of course, there is still not much of a clarity from the regulators on the new regulations,
correct me if I HCL. So that was the last one from us.
Thank you. Thank you. HTA. I think we also listened to another earlier meeting today about that. We have seen that HDF.
Financial Services Industry as such continues to be very robust and recent which HDFC. We see through the recent capital raising of the M and A transaction types. Certainly, high quality, well governed HDF. Growth businesses, we do expect, would have a good kind of take up and particularly HDB, which is HDF. In the segments of small enterprises, merchants and consumers is very attractive to global domestic HDFC.
We do in the past, we have seen in the past domestic or international investors evincing interest HDB. In the growth plans of HDB, which suggests that we were keenly watching and noting that. HDB. Under the right stage, we evaluate what is the appropriate step that we need to take. But we'll ensure at any point in time HDB is HTS.
And we're able to capture the growth as this COVID wave upside that we're able to capture, right. So HDFC. Options, we keep the options open and we look at the appropriate time about what is possible. Got it. So capital raising can be met from the outside investors, what I'm speaking of from your response.
There's no decision as such, but Quite possible that in the past, people have a hedged interest in conversation. So we'll have to see how HCL. At an appropriate time, but at this moment, the capital ratio is close to 20%, well capitalized. We do need to see HDF. With this COVID behind and the growth momentum starting to pick, then we'll have an evaluation.
HDF. And we may test the market in terms of price discovery and so on at any time. And when we do that, then there will be HDFC. Any kind of methods we can use to do that, but we will keep the options open on the back office too.
HDF. Thank you, Srir.
Thank you.
Thank you. The next question is from the line of Suresh from Macquarie. Please go ahead.
Yes. Hi. Just two quick questions. One is
on the Mastercard ban. HDFC. I mean, now that you can't launch debit cards with Mastercard payment platform, will it affect HDFC. Liability account addition and how do you plan to transition to Visa for all the Mastercard debit card, debit card, any way you're not doing.
So I'm just Wondering about this debit card issue.
Thanks for asking. It's very relevant and topical Suresh on that one. HDFC. We have only a couple of instances where We are tied to Mastercard for debit cards, right? The Times debit card, which is an age old card, which is a co brand.
And there is one more which is there, right, the business debit card, another one. So these are the only ones where it is tied. HDFC. Other than that, we have a choice of having a Visa or debit card. So and the alternatives are quite open for us.
And we do not see any disruption or inhibition to go to the alternators other than the co brand that's higher, HDFC. Like the times example I gave, right? So we do see that we have choices to make there and quite possible that we will
So in that sense, Fini, what you're saying is both RuPay or Visa can easily provide you the necessary amount of plastics required. There is a shortage of chips But that all is not an issue. They can immediately give you a commitment that if you want to issue Visa based debit cards, they can easily do that. You're saying that there will not be
We don't anticipate in the short run on that one HDF. Due to the inventory that we have and the orders that are in the pipeline and so on, we feel quite comfortable on that in the short HDFC. The chip shortage continues for a longer time. It's different. It's not just for us.
It's an industry level issue at that stage,
but we like to go through. HCF.
Okay. And just last question on the current accounting, of course. In general, the trends have been very encouraging for the last several quarters. HTS. You said that you're really gaining market share from MNC Bank.
I mean that's just because they just cannot have credit linked
portfolio of
the current accounts. So are you really seeing a shift there? Or is it an organic growth?
Suresh, Rather than basically try and forecast what will be the market share shift, at this point of time, suffice it to say that all the banks HTS. Very busy with execution of the current account circular because this is a regulatory priority. That is where we are. HCF. The way the circular is designed is that you need to have, I mean, in a simplistic way, a 10% credit out to a company to be able to have their flows unless it's in an escrow arrangement or some other arrangement.
So in that context, if you look at it, HDF. Your report and the reports of other analysts that we read seem to indicate that the larger banks HDFC. We'll have some positive flows, but this trend will become clear only over the next 6 to 9 months period.
HTA. Okay. Thanks, Rahul.
Thank you. Next question is from the line of MB Mahesh from from Kotak Securities. Please go ahead.
Good evening. Just two questions from my side. One is a question that Jimmy had kind of indicated earlier. HDFC. You made a comment saying that the slippages were partly on account of employees or an internal constraint that you had.
Given that the market activity picked up from, let's say, around June, how much do you think of the slippages of the current quarter And also, Maruk has asked this question earlier. If you could just kind of qualitatively at least HDFC. Give us some comment on what has been the nature of the slippages that have happened this quarter as compared to last year?
Mitch. If you look at, as I mentioned, see the if you HDFC. The bounces are remaining consistent, so customers are not bouncing more than they used to bounce And this is over a good few months now. During the months of April May, because we Could not go out due to lockdowns as well as our own internal decisions. You had collections moving and resolutions not keeping pace HTS.
For us, the buckets, sorry, that would include the slippages as well. From June onwards, we have noticed that there is a reversal in all these the moment we started going out. It was in the last HDF 2, 3 days of May that we started preparing to go out and conduct the collections again. HDF. And we've been therefore doing it for the month of June.
So there has been a well noticed recovery in All buckets of resolutions right from the very first, even into the recovery buckets, as I mentioned, even the recoveries are actually HCF moving in the right direction and July is further encouraging on a trend of that. So if that answers your first question HCF. Or is there anything more because that's the simple way to put it, that the portfolio integrity remains intact and June July are showing that the
HDF. Yes. So I just wanted to just check the fact that If you were to break the
issue into 2 fronts, one
is an internal issue and the other one is an external constraint caused by COVID. HCL. What's internal issue or dominating factor or not of the slippages that you've seen this quarter?
Firstly, the internal issue was also COVID. We took a decision HTS. To preserve the health, so the internal issues also COVID and nothing else. It was a health first decision that was taken. How much was due to lockdowns and how much was due to that decision?
I really don't have the break up because the lock HDF. P. Vijay Kumar:] Towns were essentially Maharashtra, Gujarat, Tamil Nadu, Delhi and some parts of Andhra and Nataka. HTS. I don't really we haven't really calculated it yet.
Sure. Understandable.
The second part of the question was qualitatively, if you can just give us some indication or comments on what was the difference in the pillars that you're seeing in this quarter as compared to HDFC.
I'm sorry, could you just say that again?
It's clear. Qualitatively, slippages by various subcategories In terms of in the last year, Mahesh, last year June quarter, HDF. It's not comparable at all because, 1, there was moratorium. And so because of the moratorium, HDFC. You will not be able to see what is what and make the comparison of what that is versus this quarter.
HDFC. Srinivasan:]
Shruti, we are just looking at the full year numbers. If I were to look at the slippages which happened last year on the retail side On the Business Banking side and you look at the slippages this quarter, are you seeing any noticeable differences in what is causing the 2?
Business Banking, no. Since you mentioned Business Banking, no. HDF. And if you look at last year versus this year on the retail side, last year had 6 months of moratorium followed by the option of HTS. Structuring to December, which also for the MSME segment went out into March because of the MSME killers itself.
This time we have just emerged from the 2nd wave with a recent announcement of restructuring, which we have put into effect as fast as we could with, as we mentioned, a host of channels through which someone can apply. HTS. However, not that many have applied. That said, it happened in the last instance as well. People do tend to apply towards the end.
So whereas What you see as the slippages right now have not been mitigated so much by restructuring. HTS. There could be some request for restructuring coming during the current present quarter in which we are. We'll have to wait and see to what extent that happens.
Sorry, just trying to understand only the slippages, not so much of what the outcome of the slippages will be. Is there a material difference that last year was HTS driven by certain segments and this year is different by different segments.
No, no, no, not at all. Not at all. Not at all. There is no change
in segments. No. HDFC. The next question is from the line of Amit Ping Shandani from UTI. Please go ahead.
HDFC. Good evening, sir. Thanks for the opportunity. In the annual report, there was a disclosure about MSME restructuring under the MSME 2019 window. What is the number after this quarter?
HTS. So
there is no further update to then what is in the annual report. So the restructuring number that you reported HDFC under the MSME window. That was also done last year or it was previous to that and just before you worked on last year? HTS. One, that's it.
Mr. Leerindra has been opened even for the previous year. FY 2020 was also open. HTS. And they could have been comment in the recent year that went by too.
Okay. HDFC.
And sir, the share of fixed sector lending as a percentage of overall lending has moved up quite sharply over the last HTS 2 years from around 3% to 11% of the portfolio. What is the overall impact HDFC. On my list of this public sector lending given that this will be a much lower yield. HDFC. There will be that is part of the mix that I called out, which is these are very highly rated HDF.
From a spread point of view, they have a thin spread, right? Because if you think about AAA, AA type of spread, even in the market that you see a 2 year, 3 year, HDFC. Has come down over the period of last 12 months, 18 months. All through the time period, there has been a tightening of spreads across all of those. Yes, there will be HDF.
That is part of the mix that we talked about.
And so I think
the public sector enterprises to whom we have lent are the best HTS. Extremely strong credit quality. And therefore, yes, they would come at a price. And I think spreads have been narrowing across the board from retail loans down to corporate loans over the last 18 months or so. HDF.
We always like to have a high portfolio quality and that's why we would select such clients. HTS.
Is there any change from a management point of view about lending to public sector, especially over the last 2 years HDFC.
If the opportunities arise and they are HDF. We will lend. I don't think there is a philosophical change, no. Is that your question, no. We have always been ready to lend to highly rated corporates.
And I think in the current environment, it would be even safer HDFC, the highly rated government companies. So, Jimmy, also to add, in the last two years, Amit, HDF. The gross capital formation has been driven by government and public sector. You would expect banks lending to them to go up, right?
Sure. HCL. And sir, if I can squeeze in the last question. What is the overall impact on priority sector HDFC commitments of this shift to public sector or non priority sector kind of segment. HDFC.
The private sector lending, the MSME that is involving definition, HTS. We will have certain clarifications in terms of the particularly the traders. Ronald and the team on the intercompany is working through those clarifications that have HDF. But are you meeting the various HDF.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] I
think sector deployments of 40% and small and medium partners and then
HTS. Amit, only always a mix of all instruments that a bank like us or large banks are going to use, HTS. Whether it is PSLC or organic or buyouts, etcetera, you would not expect a HDFC Bank to go out and not utilize any one of these elements because there are certain areas where there is margin, HDF. There is risk. There are certain areas, there is a cost, but there is no risk.
So the bank goes out and optimizes between the different instruments. HTF.
Thank you.
Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. Vaidyanathan for closing comments. Thank you, and over to you.
Okay. Thank you all participants and Aman, thank you for coordinating this. If there are further We would be happy to be engaged over the next time whatever few time periods. We will see what information or analysis that we need. Thank you.
HDFC. With that, have a great evening, great weekend. Bye bye.
Thank you very much. Ladies and gentlemen, on behalf of HDFC HCL. That concludes this conference call. Thank you all for joining us and you may now disconnect your lines.