3 Likes
Not expected from a mkt leader like HDFC Bank:
It says, they are delaying it for a couple of years now.
Disc : Holding in my core portfolio.
Not sharing information with credit bureau: We can look at this info two ways.
- HDFC dont want to share their 5.4 crore customer info so that other NBFC/Bank is at disadvantage of disbursing loans to NPA customers.
- NPA reason
Vehicle finance GPS scam and this one, looks like something fishy.
We will get clear idea once Aditya puri leaves.
PS: India cant afford any other financial scams especially of HDFC size.
Troubling times ahead?
A lawsuit for missing analyst estimates and disclosing internal investigations about their auto division to stock exchanges? Basically their stock price went down and the investors dont like it. This seems to be frivolous at best.
8 Likes
Interesting call , good information about there payment ecosystem , digital initiatives, last few minutes on culture and process
Overall giving satisfied felling on management transition and future prospects
3 Likes
1 Like
Discl - invested. Part of core portfolio.
https://economictimes.indiatimes.com/markets/stocks/news/hdfc-bank-may-raise-capital-to-build-buffer/articleshow/77814452.cms
(subscription article - ET Prime)
Discl - invested
Hi. I am having trouble finding the loan book asset spread for HDFC bank unlike Kotak. Can someone point me in the right direction so as to find it? Also I have a general question. In your experience which bank in India has the best credit risk analysis framework pre-loan approval and why? Because with the influx of micro-finance players these days, it’s not hard to argue that they may run into a problem of multiple loans running at once for the rural areas that finance institutions are targeting these days to grow fast. The problems that micro-finance institutions ran in past were defaults because of some astoundingly high interest rates offered to customers. But with each player trying to battle for market share there might be significant overlaps that may lead to more problems. Also it would be great if there is some great reading material that you can recommend so as to get me on speed with the historic and present credit approval methods by India’s biggest lenders.
1 Like
Pls flag if u find inappropriate.
My take :
Assuming - The Avg salary comes at Rs 5000 per month (lowest is Rs 3000 & some are earning as high as Rs 20000). I don’t have much details on this.
So, 25k*5k = Rs 12.5 Cr per month (hope I have not made any calculation mistake).
Annual payout becomes = Rs 150 Cr + One time trg cost = Rs 10 Cr (hypothetical)
Some questions, I have :
How much impact would this made on the revenue for HDFC Bank, considering they would be serving in tier 3, 4, 5 cities. With low incomes, but high savings. Also, how would they respond to a Pvt Bank, as rural India still loves to bank with PSU (Sarkaari hai to bharosa hai).
Disc : Invested.
1 Like
Exchange filing by HDFC bank.
Operating ratios look robust.
Things to watch out - asset quality.
Disc: no holding.
1 Like
Could somebody please explain this note from above disclosure of HDFCBANK
"During the quarter ended September 30, 2020, the Bank purchased loans aggregating
₹30.26 billion through the direct assignment route under the home loan arrangement with
Housing Development Finance Corporation Limited. "
Similarly HDFC Ltd Had this with little more details:
During the quarter ended September 30, 2020, the Corporation assigned loans
amounting to ~ 3,026 crore compared to ~ 7, 160 crore in the corresponding quarter of
the previous year. All the loans assigned during the quarter ended September 30, 2020
were to HDFC Bank Limited pursuant to the buyback option embedded in the home
loan arrangement between the Corporation and HDFC Bank.
Is there some agreement of such loan transfers between the two entities and on which basis these loans are transferred.
1 Like
Yes, there is an agreement between the two where HDFC bank sources home loans ( only ) for HDFC ltd and gets a fee for it.
Basically, all home loans are transferred onto the books of HDFC ltd.
I somehow feel HDFC and HDFC bank relationship in this regard is not fair toward HDFC bank shareholders.
HDFC banks sources loans for HDFC ltd and earns DSA fee.
Later HDFC ltd in turn sells these loans(75% of loans) back to HDFC Bank using Direct assignment.
Can you pls elaborate how it is not fair to HDFC Bank? They get their fee income and later on seems like they buyback relatively stable retail home loans, is that at a premium?
What concerns me is why there is this need to buyback the loans when HDFC Ltd is the actual housing loan entity and should own all such loans?
1 Like
Some home loans can be classified as priority sector lending.RBI mandates that all banks have enough loans in priority sector.This arrangement helps hdfc bank complete its product portfolio also fulfil some of its priority lending requirements.
1 Like
Look at it like this,
When you are the best bank in the country in almost all the products you are into and When you are the one who is acquiring the customer, taking the effort in processing, disbursing, managing liability to maintain that portfolio on book and doing collections.
Why do you even want to involve HDFC ltd ? It’s like just because HDFC ltd is a parent they are providing their credit underwriting policy and getting cool risk adjusted spread.
1 Like
This agreement betwn hdfc and hdfc bank is quite old…i think almost since inception of the bank…it was a carefully thought out agreement worked out betwn Deepak Parekh and Aditya Puri…this was done largely to ensure there is no conflict of interest betwn the two entities and is also legally complied. Therefore, this is well known to all major shareholders for decades and this is nothing new.
Rgds
Rajesh
Disc - Invested
1 Like
