In an interaction with the media, HDFC Bank’s deputy managing director Paresh Sukthankar discusses the outlook for FY16. Excerpts:
What’s the outlook on branch expansion?
We planned to add 300-400 branches in the previous fiscal, but stepped it up in the last quarter to touch 600. Next year at this point of time, we would probably want to add roughly 300 because we have added some branches this fiscal that we would have otherwise done in FY16.
How was the demand for credit from the corporate sector?
The retail business has grown at about 17% and wholesale business at almost 27%.
Did you sell any assets to ARC?
We sold about R500 crore in the quarter and in the financial year — that’s the only period in which we sold any loans.
What’s your outlook on deposit rates?
Whatever deposit rate changes have happened so far have already been transmitted into base rate changes. Only a further deposit rate change could translate into a base rate change. We are comfortable right now. Our deposit and loan growth has roughly been in tandem, so we have adequate deposit growth to fund the loan growth. Obviously, a lot depends on how the system as a whole and deposit growth, in particular, move.
How has the CV segment performed?
The pain in the CV segment has come off. After having contracted last year, the commercial vehicle and commercial equipment portfolio has grown by 8.3% y-o-y on a combined basis. Sequentially, it’s flat. We have reached a stage where incremental disbursements are offsetting run-offs in the portfolio. On the asset quality front though, you can’t say we are completely out of the woods, but there has been a marginal improvement in terms of NPLs and recoveries.
What’s your exposure to agriculture?
Currently, we are very comfortable with our agriculture lending. As a policy, we have been integrating our entire PSL strategy into every business we have and, within that, direct agri is an important component. There have been some seasonal rains and hailstorms, which impacted specific areas, and that would be something we would keep in mind. We have not seen any impact as yet. It’s still early days.
What is your outlook on loan and deposit growth for FY16?
We are back to our usual positioning of wanting to grow a little faster than the system. Therefore, the absolute rate of growth would be a function of what we might see as a system loan growth. We all know that loan growth at the system level was languishing at high single-digit or just about 10% for much of the year, and it crossed 12% as of now. If we see a pick-up in GDP by roughly a percent in this financial year, then system loan growth of somewhere close to 13-14% is doable. We are still positioned to grow a few percentage points faster than the system.