HDFC Bank crossed the milestone of ₹10,000 crore in net profit in FY15. The private sector lender expects growth to continue in retail and wholesale book after a tough environment last year. Speaking to the media, during a post-results conference call, Paresh Sukthankar, Deputy Managing Director, said his bank is comfortable with the current interest rates and that a further base rate cut is unlikely before a deposit rate cut.

The bank’s loan growth has been quite solid. Where is the demand coming from?

Domestic retail loans have grown by about 21.8 per cent and if you look at various products, such as auto loans have grown by 20 per cent, credit cards by 31 per cent, home and personal loans by 25 per cent each. Also, our business banking segment which includes SME (small and medium enterprises) and some retail, grew by 17 per cent. The overall wholesale business has grown by 17.6 per cent which has come from across large, mid and emerging corporate…Also the pain in commercial vehicle (CV) segment has clearly come off and it has grown 8.3 per cent year-on-year.

Do you see revival in corporate demand?

We haven’t seen the term lending side growth, as the new investment cycle which will partly drive the corporate growth hasn’t quite fructified into demand, also there is a lead time. So, much of the increase has come from working capital loans and some medium term and some long term lending.

Will you look at cutting interest rates further?

As of now, we are comfortable at the current level of deposit and base rate…from an interest rate perspective, the key determinant of changes in deposit and lending rate will be demand and supply side. The deposit rates are sustainable to fund loan growth right now. If the loan growth picks up, we may see some changes.

For the full year, how do you see the margins moving in a downward interest cycle?

Our margins are likely to remain in the range of 4.2-4.4 per cent, similar to the last few quarters. I don’t necessarily see any impact just because of the base rate cut on margins. With a fairly healthy CASA ratio, we can manage our margins. We will also see more corporate demand going forward depending on the environment and demand for credit…Our general feeling is that if the economy grows by about a per cent, most will be from capital expenditure. So, I do expect some incremental corporate growth and some capex demand.

Banking industry may grow by 13-14 per cent with the economy picking up, and we will grow 4-5 per cent faster than the system. We’ll have to watch how the banking system performs, especially in the second half of the year.

Your operating expenses have also risen. Why?

We added almost 350 branches this quarter and in the earlier quarter as well. We have also increased our staff strength (by 10,000 in FY15 as against no new staff a year ago).

So, in a potentially growth mode, expenses do increase.

You had a rush of branch expansion in the last quarter. Any particular reason this? And, will retail be the focus this year as well?

There’s no particular reason, while most banks are cutting expenses, we did not want to compromise on the expansion. The last quarter, it just happened that we had the opportunity to get the branches operational earlier. We added 341 branches in FY14 and 611 in FY15…In this year, we will add about 300 branches further in FY16…I wouldn’t say our focus is primarily retail. Yes, retail is growing faster than wholesale with the pick-up in home loan purchases we made. Both retail and wholesale loans will continue to grow.

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