The amalgamated entity following the merger of erstwhile HDFC with HDFC Bank effective July 2023, is a “completely new organisation” and cannot be compared to either of the two pre-existing lenders, HDFC Bank MD and CEO Sashidhar Jagdishan said in an analyst call.

“It’s important to reiterate that this is a completely new organisation. The merger with e-HDFC and the bank has landed a certain set of day one financials and so there is a new starting point across all matrices. This is a new organisation so not only you, but even we have to desist from having any comparisons vis-a-vis the standalone financials of either the bank or even e-HDFC,” he said.

Jagdishan’s comments after broad-based criticism of the bank’s handling of its post merger communication, especially following the Q3 FY24 earnings which had raised concerns regarding the bank’s deposit mobilisation capabilities and muted financial metrics.

“Ever since our famous — you may call it infamous — third-quarter results earnings call, we have received a lot of feedback from several of you. With all humility, we have incorporated many of the feedback,” he said in the Q4 FY24 analyst call, adding that deposit accretion is typically higher in the last quarter due to transitory year-end flows.

“There are some transitory flows that have come in which is more than what we have anticipated. Even adjusting for that, retail growth was rather healthy,” he said, adding that enhanced customer engagement and elevated ‘service-first’ culture will be crucial in sustaining this momentum. In addition, harnessing technology and digital channels will be a key focus area.

Jagdishan also said that the bank might look at inorganic opportunities to meet priority sector targets, especially some sub-targets such as small and marginal farmers and economically weaker sections.

“These are not easy to achieve. These are the two areas that we have to ride on inorganic ways to meet the target,” he said, adding that the PSL burden will increase with expansion of the book as one-third of the erstwhile HDFC portfolio gets added to the bank in October 2024.

Even so, Jagdishan was insistent that the bank “will not be chasing growth for the sake of growth” and “will be delighted even if the margins remain at the current levels”. While the bank will have a positive bias towards growth over the next 2-3 years, investors will need to be patient and see the transition period through, he said.

“Our focus is to improve profitability metrics defined by return on assets (RoA) and earnings per share. Most important is focus in retail deposit franchise. That’s not going to be achieved by shortcuts we take,” he said, adding that providing any guidance would distract from the long-term objectives of the bank.

During the quarter, the bank announced an ex-gratia payment of around Rs 1,500 crore for employees, which Jagdishan said was to address heightened attrition, and also a gesture of appreciation for the work done during and post the merger.

“In the last couple of years, we have had heightened attrition as well. We endeavour to ensure that our large ground workforce, which is 90 per cent of our total manpower, is motivated and this is a way of trying to say thank you to them,” he said adding that the team has worked hard after being battered from all fronts due to the much larger balance sheet and a complex and adverse market liquidity situation.