HDFC Bank Ltd

It gives me immense pleasure to present to you the Integrated Annual Report of your Bank for the Financial Year 2023-24.

I would like to congratulate my fellow Board members, the entire team of the Bank and erstwhile HDFC Limited for having accomplished one of the most complex mergers in the financial services industry by completing the process in a very seamless, efficient and effective manner. I am grateful for the support of Government of India, the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI), Insurance Regulatory and Development Authority of India (IRDAI), the stock exchanges and other regulatory authorities for providing their approvals and guidance during the entire process. The merger has further strengthened our position as a leading financial conglomerate of India and our Bank is now the custodian of the venerated HDFC brand that was created and nurtured by the late Mr. H T Parekh, Mr. Deepak Parekh and capable and eminent members of his team.

The Indian economy as well as your Bank have demonstrated resilience in a world characterised by headwinds and uncertainties. The sound policies and timely interventions of RBI have ensured that we were well prepared for the monetary tightening that happened in the developed world after the inflationary pressures manifested themselves across the globe. The Bank has responded to the evolving liquidity scenario and calibrated its response over the past year.

The financial year gone by has seen the GDP in India grow at 8.2 per cent while global GDP growth was 3.2 per cent in 2023. We continue to remain the world's fastest growing major economy, with GDP growth projected at 7.2 per cent in the current financial year. This has come about despite a slowdown in global growth. The GDP growth has been supported by a boost in capital expenditure, particularly in infrastructure development, including roads, highways, railways and housing. Between FY22 and FY24, overall capex growth in the economy stood at 11.0 per cent on an average with government doing the heavy lifting. Private sector investment also showed some signs of resurgence in sectors such as cement, steel, and oil and gas. Growth has also received a fillip through a rise in manufacturing and construction activity. This has been due to a combination of lower input costs, Government support to the Micro, Small and Medium Enterprises (MSME) sector through Emergency Credit Line Guarantee Scheme (ECLGS) and large scale manufacturing through schemes like Production Linked Incentive (PLI). Overall, the past fiscal year has shown strong macroeconomic fundamentals of the country. However, slowdown in household savings has put a strain on liquidity across the economy. Your Bank has been well placed to obtain the benefits of this growth and has actively funded the small and medium enterprises that form the backbone of the economy as well retail consumers, managing well within the constraints of liquidity and elevated costs of incremental funding.

As we complete one year of the merger, I am happy to note that the process of integration has been completed seamlessly and efficiently across all dimensions of the business and customer services and we have put in place robust risk management and compliance functions from a supervisory perspective for the Bank and the subsidiaries, which now cover a substantially large footprint in the financial services domain. The synergies of the merger are being manifested through the combined strengths of the two merged entities, the home loan expertise of erstwhile HDFC Limited and the extensive distribution franchise of HDFC Bank. Today, most of our branches are selling home loans, including those in semi urban and rural locations. As the nation's growth story unfolds, we stand prepared to reap the benefits through this historic combination.

HDFC Bank's financial performance in the past year demonstrated resilience amidst challenges, with market share growth in deposits as well as advances. The Bank ensured prudent risk management and asset quality across portfolios. Its profit after tax grew by 37.9 per cent to H60,812.3 crore on a standalone post-merger basis. A comprehensive view of our performance is captured in the report placed before you.

As a fully Board governed entity with no promoter, the weight of responsibility is on us to ensure best standards of governance to look after the interests of shareholders, depositors, employees and other stakeholders. As a responsible financial institution, we strive to create sustained value for all our stakeholders without compromising on our core values of Customer Focus, Operational Excellence, Product Leadership, People and Sustainability in our day-to-day operations. These values continue to be upheld as we keep maintaining stringent standards of corporate governance, placing significant emphasis on fundamental principles such as independence, accountability, responsibility, transparency and timely disclosure.

Throughout the year, the Board Committee meetings were convened regularly, playing a pivotal role in assessing critical areas of the Bank's governance. These Committees facilitate the governance and supervisory responsibilities of the Board members as they provide oversight and feedback on critical areas and the performance of the management of the Bank. Cognisant of our status as a large financial conglomerate we have also put in place group level oversight of compliance and risk management of the diverse subsidiaries, while at the same time making their respective management teams accountable for governance and compliance.

During the year Mr. Sashidhar Jagdishan was reappointed as the Managing Director and Chief Executive Officer of the Bank with effect from October 27, 2023. Mr. Kaizad M Bharucha, was elevated as Deputy Managing Director of the Bank w.e.f. April 19, 2023. Mr. Bhavesh Zaveri and Mr. V. Srinivasa Rangan were appointed as Executive Directors to the Board with effect from April 19, 2023 and November 23, 2023 respectively.

In the evolving banking landscape with fast changing technology, our unwavering focus remains on our customers and our commitment to enhancing customer experiences and obtaining increased share of their wallet through innovation and technology. Over the last year, we have achieved significant milestones with key products, services and innovations backed by robust technology infrastructure, reinforcing our dedication to digital transformation and fully embracing digital banking. The achievements on our digital banking initiatives highlight our commitment to delivering world class and secure banking services, ensuring the safety and trust of our customers, and making technology our key competitive differentiator. We are committed to providing personalised solutions and ensuring banking services are inclusive and accessible to the wide spectrum of our society.

While the merger with erstwhile HDFC Limited has been the core focus during the year under review, it is equally important to reiterate the strides our Bank has made in our continuing commitment to Corporate Social Responsibility (CSR) and social value creation. Given the large scale of our operations and strong profitability, we recognise the criticality of giving back to the very communities in which we operate.

Economic and financial wellbeing of society is what every responsible lender should aspire for. Our commitment to this principle is underscored in our CSR programme. Our core focus areas are Rural Development, Education, Skilling and Livelihood, Healthcare and Financial Literacy and Inclusion. Our Bank has cumulatively impacted over 10 crore lives through our social initiatives.

As a Bank, we also stand resolute with the government in its endeavour to promote financial inclusion. The CSR programme of your Bank supplements the government's flagship welfare schemes aimed at improving the lives of farmers, protecting vulnerable segments of society through micro insurance, pensions, loans to MSMEs and urban and rural livelihood initiatives, amongst others.

As a large financier, we understand the need to align with the country's strategy towards decarbonisation. The Board of your Bank increased oversight on ESG disclosures and climate-related risks as well as keeping abreast with evolving regulatory frameworks.

I extend my sincere thanks to all our stakeholders for their continued support, and most of all, to the large HDFC Bank family of over two hundred thousand people. Needless to say, it is the collective passion and commitment of all that will allow us to achieve the future growth of the institution.