HDFC Bank - Focus Shifting From Product To Customer Post Merger: Prabhudas Lilladher

Post-merger focus would shift from product-based to customer centric. Immediate benefit of the merger would be access to 25 million HDFC group customers that do not bank with HDFC Bank while 60-70% of HDFC customers do not have a liability relationship with the bank.

Meanwhile, the target is to bring down cost to income to 30% over the next decade (36% on merged basis in FY23). RoA post-merger would be maintained between 1.9-2.1%.

Meanwhile, bank would protect loan growth (1.5-2.0x of the system) irrespective of its size.

Deposit market share is about 10% and bank would grow by gaining market share. The incremental deposit accretion of 18-20% market share may not be a challenge.

On net interest margins, bank is willing to let go volumes in case of intense competition; it sold down Rs 1 trillion of corporate loans in fiscal 2023 to not compromise on pricing.

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