HDFC Bank to keep margins at current levels

Comparing HDFC Bank's transition period to the construction of the coastal road (in Mumbai connecting Marine Drive to Worli), he said: "It's like the coastal road when it was getting built; we were all sort of having a lot of problems with it, we were trying to navigate our traffic around it, but now when it's up and running you know people are so delighted."

He hinted that HDFC Bank will have similar benefits of coastal road post-transition: "We will have our day when the proportion of borrowing comes down. We will have enough momentum in terms of funding, which we can unleash in terms of growth. Even during this period, as I said, we will maintain stability in our metrics...we will try and ensure that we have a positive bias and trajectory over the next two to three years."

HDFC Bank's margin was 4.1-4.3% pre-merger and 3.4-3.6% after the merger with HDFC.

Although the private lender's shares are down 8% in the past year, it remains the most valued bank with a market value of ₹11.6 lakh crore.

On Saturday, the bank reported a net profit of ₹16,510 crore for the fourth quarter, up 37% from a year earlier, largely helped by the sale of stake in its education loan subsidiary, HDFC Credila Financial. Sequentially, the profit increased less than 1 percentage point.

The bank, the first among large lenders to declare results, posted a net profit of ₹60,810 crore for the fiscal year, up 38%.

Jagdishan said: "We are not a quantity player for liabilities or assets. Our focus is on quality, which is a balance between risk and margins. We have demonstrated that whenever there are any adverse or early indicators on the risk side, we tend to grow slow. If there is heightened competition or irrational competition both on the liabilities and assets side, we are happy to give up that kind of a share. We're happy to grow slowly."

On margins, he said: "Even if it's stable...we'll be delighted because we want to ensure that the cost of incremental deposits continues to be range bound...the business mix is what will then determine the margin movements, also because if I continue to have a higher proportion of retail and CRB (commercial and rural banking) all things remaining same it will have a positive impact on margin."

The bank announced plans to raise ₹60,000 crore in infrastructure bonds, which will reduce its cost of funds and qualify it for relief on regulatory requirements such as statutory liquidity ratio and cash reserve ratio.