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Investor Presentation

Investor Presentation 27
Investor Presentation Contents Well positioned across India’s GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 1 Well positioned across GDP spectrum India GDP `. Tn Private Consumption 160• Well positioned in urban and rural markets 140 • Leading player across retail loan categories 120 • Focus on working capital finance and trade services 100 80 60 Government 40 • Large tax collector for the Government of India 20 • Significant provider of cash management services for public 2015 2016 2017 sector and semi government undertakings Private Consumption Government Consumption Investment Investment • Term Loans for brown field and green field capex • Loan syndication, debt capital markets • Project financing to strong and established players • Leading working capital banker to capital goods manufacturers Source CSO (GDP at Market Prices at current prices with new base year of 201112) FY – Fiscal year ended March 31 ` Rupees 2 Contents Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 3 Wide Range of Products and Customer Segments Loan Products: Deposit Products: Other Products / Services: Auto Loans Savings Accounts Depository Accounts Personal Loans Current Accounts Mutual Fund Sales Home Loans / Mortgages Fixed / Recurring Deposits Private Banking Commercial Vehicles Finance Corporate Salary Accounts Insurance Sales (Life, General) Retail Retail Business Banking NRI Services Credit Cards Bill Payment Services Banking Loans against Gold POS Terminals 2Wheeler /Consumer Durable Loans Loan products contd… Debit Cards Construction Equipment Finance Foreign Exchange Services Loans against Securities Self Help Group Loans Broking (HDFC Securities Ltd) Agri and Tractor loans Joint Liability Group Loans Education Loans Kisan Gold Card Commercial Banking: Transactional Banking: Investment Banking: Key Segments: Working Capital Cash Management Debt Capital Markets Large Corporate Wholesale Term Loans Custodial Services Equity Capital Markets Emerging Corporates Bill / Invoice discounting Clearing Bank Services Project Finance Financial Institutions Banking Forex Derivatives Correspondent Banking MA and Advisory Government / PSUs Wholesale Deposits Tax Collections Business Banking / SME Letters of Credit Banker to Public Issues Supply Chain (Suppliers and Dealers) Guarantees Agriculture Commodities Products / Segments: Other Functions: Foreign Exchange Asset Liability Management Treasury Debt Securities Statutory Reserve Management Derivatives Equities Complete Suite of Products to Meet Diverse Customers’ Needs 4 Business Mix Total Deposits Gross Advances Profit Before Tax `. Bn `. Bn `. Bn 5,600 230 6,600 2,800 115 3,300 2015 2016 2017 2015 2016 2017 2015 2016 2017 Retail Wholesale Retail Wholesale Retail Wholesale • Over 90 of net revenues from customer segments • Large retail deposit franchise – a source of stable funding • Well balanced loan mix between wholesale and retail segments • Equally well positioned to grow both segments st Indian GAAP figures. Fiscal Year ended 31 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 5 Contents Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 6 Strong National Network Mar ’14 Mar ’15 Mar ’16 Mar ’17 Branches 3,403 4,014 4,520 4,715 ATMs 11,256 11,766 12,000 12,260 Cities / Towns 2,171 2,464 2,587 2,657 Branch classification Mar’14 Mar’17 Rural Urban Rural Urban 19 20 22 21 Semi Urban Metro Metro 33 Semi Urban 24 28 32  All branches linked online, real time  52 of total branches in Semiurban and Rural locations  Customer base of over 40 million FY – Fiscal year ended March 31 7 High Quality Deposit Franchise Total Deposits CASA Ratio Average Saving Balance per Account `. Bn `. 6,600 50 70,000 3,300 25 35,000 0 2015 2016 2017 2015 2016 2017 2015 2016 2017 Savings Current Time Savings Current • Healthy proportion of CASA (current savings) deposits • Floats from multiple transactional banking franchises • Provides customer base for ongoing crosssell through branches • Quality growth rather than mere numbers Indian GAAP figures. Fiscal year ended 31st March; ` Rupees 8 Low Funding Costs – Healthy Margins Cost of Deposits Net Interest Margin 6.00 7.00 6.04 5.91 5.36 4.4 4.2 4.3 3.00 3.50 0.00 0.00 2015 2016 2017 2015 2016 2017 • Amongst the lowest deposit costs in the industry • Asset yields based on higher proportion product mix of retail loans • Healthy margins – relatively stable across interest rate and economic cycles Indian GAAP figures. Fiscal year ended 31st March LAF/MSF borrowings from RBI are grossed up as per revised guidelines from RBI and accordingly previous years NIM have been recomputed . 9 Strong NonFunded Revenues `. Mn 124,000 Multiple sources of fees Miscellaneous income commissions: P/L on investments Banking charges (Retail Wholesale) 62,000 Recoveries Credit card fees Retail asset fees Fx Derivatives Third party product sales Fees Commission Trade finance Cash management Depositary charges 2015 2016 2017 Custody • Other Income (nonfund revenues) at 27 of Net Revenues in FY 2017 • Composition of Other Income in FY 2017: • Fees and commission 72 • FX and Derivatives Revenues 10 • Recoveries from writtenoff accounts and miscellaneous income 9 • Profit / Loss on sale of Investments 9 st Indian GAAP figures ; FY Fiscal Year ended 31 March. Miscellaneous income includes dividend from subsidiaries/associates. ` Rupees 10 Leveraging Technology Greater Choice and Convenience for Our Retail Multiple Delivery Channels Customers 2017 2007 ATM Phone Banking 8 2 Branches Branches 22 10 ATM Phone Banking 49 10 Internet Mobile 80 Internet Mobile 19 Customer Initiated Transactions by Channel Central / Regional Processing Units Economies of Scale; Branch focus: Sales Service Electronic Straight Through Processing Lower Transaction Costs Error Rates Data Warehousing, CRM, Analytics Higher Sales Credit Efficiencies, Crosssell Innovative Technology Applications Enable new Products / Channels including Apps 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. Apps include Micro/Lite App, Smart Phone App and Tablet App 11 Healthy Asset Quality `. Bn NPA to Advances Loan Loss Provisions 80 2 1.05 0.93 0.94 40 1 0.33 0.28 0.25 0 0 2015 2016 2017 2015 2016 2017 Gross NPA Net NPA Gross NPAs Specific Provision General Provision Floating Provision • Amongst the best portfolio quality (wholesale retail) in the industry • Strong credit culture, policies, processes • Specific provision cover at 69 of NPAs, total coverage ratio over 130 • Restructured loans at 0.1 of gross advances • GNPA ratio lower than 10 year average even in current challenging environment st Indian GAAP figures. Fiscal year ended 31 March. Net Non Performing Assets (NPA) = Gross NPA less specific loan loss provisions ` Rupees 12 Consistent Financial Performance Net Profit `. Mn 15 0,000 120,000 90,000 60,000 30,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EPS ROA `. 2.0 2.0 2 1.9 1.9 1.9 57.2 60 48.8 42.1 35.5 1 17.0 30 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Indian GAAP figures. Fiscal year ended 31st March 13 Contents Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 14 Digital Banking Changing customer experience Increasing stickiness / cross sell Enabling better risk profiling Leading to higher STP volumes and lower turn Potential for improving Cost to Income ratio around times (TATs) Advanced Analytics Investment Advisory Key • Virtual RM • For risk management areas of focus • Online investment • Making personalised products recommendations One Click Payment Faster Loans • P2P Payments Chillr • Loans to existing customers • P2M Payments / ewallet PayZapp • Instant Loan disbursement on Net • Smart Buy Banking and ATMs • Digital sourcing across products • ‘Design your own LAS’ STP – Straight through processing LAS Loans against Securities 15 1 Retail Loans – Profitable Growth `. Bn 3,000 Gold Loans Two Wheelers Overseas / NRI Others • Well diversified product mix CV/CE • Leading player balancing Credit Card volumes / market share with Kisan Gold Card (agri) margins and risk Business Bkg 1,500 • Home Loans – FY 2017 Home Loans origination ` 188 Bn and buyback ` 131 Bn Personal Loans • Loan losses for most products stable and within product pricing Auto Loans parameters 2015 2016 2017 Indian GAAP figures. Fiscal year ended 31st March; Retail loans are classified as per RBI guidelines for segmental reporting (Basel II). In arrangement with HDFC Ltd., CV/CE – small /medium ticket commercial vehicle and construction equipment loans, „Others‟ include Tractor loans, Loan to SHGs / JLGs, Loans against Securities, etc. ` Rupees 16 1 Wholesale Banking Accessing Multiple Segments Wholesale Advances `. Bn 2,700 • Leveraging relationships with large / emerging Others corporates and SMEs for multiple products CV/CE • Balanced mix between working capital financing, Business Bkg term loans and trade Emerging 1,350 • Market leaders in cash management solutions Corporate • Well diversified loan portfolio Corporate • Investment banking capability across multiple Corporate industry segments and product verticals 2015 2016 2017 Dealers Vendors Corporate Distributors OEM Customers • Leading provider of electronic banking services for supply chain management (SCM) 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 ,commodity finance and other consumer loans over ` 50 million. CV/CE – Large ticket commercial vehicle and construction equipment loans ` Rupees 17 1 Customer Focused Treasury Products `. Mn FX Derivatives Revenues 15,000 Others 8 BB Corp 6 16 7,500 ECG 12 Retail 58 2015 2016 2017 • 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 banking, ECG – Emerging Corporate Group, BB – Business Banking; „Others‟ includes Capital Markets and Commodity Finance groups 18 1 Cards – Market Leadership Number of Cards Credit Cards Receivables Acquiring Thruputs mn `.Bn `.Bn Mn 34 270 2,600 17 135 1,300 2015 2016 2017 2015 2016 2017 2015 2016 2017 Debit Card Credit Card • Market leader in credit cards – 8.5 mn • About 75 of new credit cards issued to existing customers • Merchant acquiring – over 420,000 POS terminals • Leading provider of payment gateway services st Indian GAAP figures. Fiscal year ended 31 March. ` Rupees st FY 2017 – Fiscal year ended 31 March 2017 POS – Point of Sale 19 Banking on Rural India Banking Services for the rural ecosystem: Rural / micro branches offering customised loan and deposit products, whilst maintaining credit Comprehensive Product Suite standards • Agri Credit / Kisan Card / Cattle Loans • Tractor Loans Intermediaries • Retail Loans – Two Wheeler / LCV etc. • Small Working Capital Loans (Arhatiyas, traders) Farmers • Sustainable Livelihood Banking • Regular / Basic Savings Accounts • Term / Micro Recurring Deposits • Life General Insurance Products Food Agri Input Processors Innovative Solutions through Technology Suppliers • Milk to Money ATMs • Payment solutions for agri. procurement Local Self Help Groups Government Micro branches are primarily two member branches to expand and deepen the penetration in the rural market including in unbanked areas. 20 Subsidiary Companies HDB Financial Services Limited • Main Products: Retail (LAP, CV/CE, PL), Insurance services and Collection services • Network of 1,151 branches across 815 cities • FY 2017 Loan book : ` 323 Bn, Net Profit : ` 6.8 Bn Gross NPA : 1.45, Capital adequacy ratio (CAR) : 20.8 HDFC Securities Limited • Stateoftheart trading and internet platform • 1.8 million customers ; 273 branches across 190 cities • FY 2017 Net Profit : ` 2.2 Bn ` Rupees FY 2017– Fiscal year ended March 31, 2017; LAP – Loans Against Property; CV/CE – Commercial Vehicle and Construction Equipment Loans; PL – Personal Loans 21 Contents Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 22 Key Financials `. In million Quarter Quarter Year Year Ended Ended Change Ended Ended Change Mar 17 Mar 16 Mar 17 Mar 16 Net Interest Income 90,551 74,533 21.5 331,392 275,915 20.1 Fees Commissions 25,230 21,724 16.1 88,116 77,590 13.6 FX Derivatives 3,567 2,828 26.1 12,634 12,277 2.9 Profit / (loss) on Investments 1,804 1,155 56.2 11,394 7,318 55.7 Recoveries 3,862 2,952 30.8 10,821 10,332 4.7 Net Revenues 125,014 103,192 21.1 454,357 383,432 18.5 Operating Costs 52,220 45,843 13.9 197,033 169,797 16.0 Provisions Contingencies 12,618 6,625 90.5 35,933 27,256 31.8 Profit Before Tax 60,176 50,724 18.6 221,391 186,379 18.8 Tax 20,275 16,982 19.4 75,894 63,417 19.7 Profit After Tax 39,901 33,742 18.3 145,497 122,962 18.3 Indian GAAP figures (` Mn) , ` Rupees. Recoveries includes miscellaneous income and dividend from subsidiaries/associates. 23 Financial Highlights Quarter ended March 2017 • Gross advances increased by 19.5 to ` 5,586 Bn • Deposits up by 17.8 to ` 6,436 Bn • Core net interest margin at 4.3 • Core Costtoincome ratio at 42.4 • Net profit up by 18.3 to ` 39.9 Bn • Gross NPA / gross advances at 1.1 • Net NPA / net advances at 0.3 • Capital adequacy ratio (CAR) Total 14.6 of which Tier I at 12.8 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 regulations. Comparisons are with respect to corresponding figures for the quarter ended March 31, 2016 24 Contents Well positioned across GDP spectrum Meeting Diverse Customers’ Needs Unique Franchise in the Indian Banking Sector Key Business Initiatives Financial Highlights Value Proposition 25 Value Proposition – Healthy Growth, Low Risk Growing economy / Nationwide urban rural One stop shop for financial banking industry, branch network and and payment needs Gaining market share multiple channels Leading player across Healthy balance sheet and Leveraging CRM, analytics, multiple products / revenue growth digital platforms customer segments Leveraging organic and Disciplined margin and Strong risk management, inorganic growth capital management with a focus on asset quality opportunities focus on RoA/RoE Proven ability to generate Shareholder Value 26 Certain statements are included in this release which contain words or phrases, such as “will”, “aim”, “will likely result‟, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of these expressions, that are “forwardlooking statements”. Actual results may differ materially from those suggested by the forwardlooking 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 nonperforming 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 on us in India and other jurisdictions, our ability to roll over our shortterm 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. In addition, other factors that could cause actual results to differ materially from those estimated by the forwardlooking 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 terrorist attack in India, the United States or elsewhere, antiterrorist or other attacks by the United States, a United Statesled coalition or any other country, tensions between India and Pakistan related to the Kashmir region or between India and China, 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.
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