After successfully completing the merger with parent HDFC, Sashidhar Jagdishan, managing director and chief executive of HDFC Bank, stated on Saturday that the country’s largest lender plans to grow every four years. In a letter to the nearly 4,000 HDFC employees who joined the bank on Saturday, Jagdishan stated that the future is bright and that work on realising the merger’s potential begins immediately.
“The runway for financial services and mortgages, which are so underserved and under penetrated, will be enormous.” HDFC Bank – the combined organisation – will be best positioned to capture growth, with a vast and growing distribution and customer franchise, more than adequate capital, strong asset quality, and profitability. We could accelerate our growth rate.
The former HDFC’s corporate offices at Ramon House now has the HDFC Bank branding, and authorities expect the entire process to be completed within the next 24 hours.
It should be highlighted that since the merger’s announcement on April 4, last year, dedicated teams have been put in place to make the transition as smooth as possible. As part of the USD 40 billion all-share deal, the largest in Indian business history, HDFC Bank agreed to absorb all of its parent’s over 4,000 workers.
“Our work begins today,” Jagdishan added, “in realising the potential of what this merger holds for us.”
To achieve its growth objectives, Jagdishan stated that the bank will add approximately 1,500 branches per year for several years in order to better serve the country’s middle and higher classes.
It will also continue to invest in digital, which, according to Jagdishan, would transform HDFC Bank into a “technology company into banking,” with details to be revealed over the next three years.
He stated that the bank will evaluate its employees based on how they manage governance and compliance, teamwork, and their ability to please consumers.
The canvas being presented to HDFC Ltd staff is large – both professionally and personally, according to the email, which also stated that an external expert was hired to arrive at the proper formula for inducting people into the bank and deciding their role in the hierarchy.
HDFC’s cost-to-revenue ratio of 0.04 percent was the lowest for any mortgage firm in the world, according to Jagdishan, who complimented the company’s leadership, including Deepak Parekh, Keki Mistry, and Renu Karnad, for developing such an institution.
According to him, the home loan is a very emotive commodity that creates a strong tie between the financier and the borrower, and HDFC Bank would like to capitalise on that bond.
“The penetration levels of the home loan product in its (HDFC Bank’s) customer base are quite low, as is the extent to which the distribution has been leveraged.” This is a fantastic opportunity! “The runway for growth will be large and will last a long time,” Jagdishan predicted.
HDFC Bank will move from sales management to a relationship management model because of the opportunity to cross-sell that exists within the franchise after the addition of mortgage finance, insurance and asset management subsidiaries, Jagdishan said.
“With this ‘power of bundling,’ the velocity of product sales and the reduced touch points to serve the customer will be a game changer,” he continued.
HDFC Ltd, the parent company of the country’s largest private sector lender, merged into HDFC Bank on Saturday, with both firms’ boards of directors approving the plan that was initially proposed on April 4, last year. HDFC Ltd, the world’s largest pure-play home funder, goes out of business 44 years after it was created.
The USD 40 billion merger, the largest in Indian business history, is being driven by a shifting regulatory landscape that has reduced the benefits of HDFC continuing to operate as a non-bank lending entity.
Following the merger, HDFC Bank will become the world’s fourth most valuable lender, closing the asset size difference.with state-owned SBI to be the second largest Indian bank.
The combined entity’s total revenue was Rs 41 lakh crore at the end of March 2023. With the merger, the entity’s net worth would exceed Rs 4.14 lakh crore.
At the end of March 2023, the combined profit of both firms was around Rs 60,000 crore.
With the completion of the transaction, HDFC Bank will be 100% owned by public shareholders, with existing HDFC shareholders owning 41% of the bank. For every 25 HDFC shares held, each shareholder will receive 42 HDFC Bank shares.
The board of directors of HDFC Bank, in conjunction with the board of directors of HDFC Limited, has set July 13, 2023, as the date for deciding the HDFC Ltd shareholders who will be issued and allotted HDFC Bank shares, it added.
Furthermore, July 13 has been set aside for the continuance of HDFC Limited warrants in the name of HDFC Bank.
The board has set July 12, 2023, as the date for the transfer of non-convertible debentures, and July 7, 2023, as the date for the transfer of HDFC Ltd commercial papers in the name of HDFC Bank.
According to a statement, the merged entity brings together significant complementarities that exist between the two entities and is poised to create meaningful value for various stakeholders, including respective customers, employees, and shareholders of both entities, through increased scale, a comprehensive product offering, balance sheet resiliency, and the ability to drive synergies across revenue opportunities, operating efficiencies, and underwriting efficiencies.
