HDFC results show some pricing power coming back to banks: Lalitabh Srivastava, Sharekhan

A player like HDFC is expected to grow in a calibrated manner. I am not too worried about retail business slowing down, said Lalitabh Srivastava, AVP-Research, Sharekhan, in an interview with ETNOW.

Edited excerpts:

What was your key takeaway from HDFC Bank’s performance?

HDFC results were slightly ahead of street’s expectation. HDFC has been hallmark on consistency and all those fronts. This time also it was no different. First of all, the improvement in margins indicates that some amount of pricing power is coming back to banks and some amount of the benefits that we were expecting due to weakened competition, was also seen during the quarter.


At the same time. there is another positive in that deposit growth has been good. Deposit growth for some time now has been lagging the advances growth but this time, the pace of growth in deposits has been better. So that is another positive. The market is very competitive in terms of retail term deposits and on those lines, HDFC is still maintaining a strong position. Overall, a good set of numbers and the market should look positively into that.

Retail businesses are slowing down. That is the core business for HDFC Bank. Could we be looking at some near-term slowdown further?

A player like HDFC is expected to grow in a calibrated manner. I am not too worried on that aspect. Retail business has been performing better than the overall business for sometime. Yes, the corporate book has performed and I would see that as a positive.

Given that they have sufficient capital on books, if we assume loan growth of over 20% and lower deposit growth, when do you see the need for the next round of capital raising for the bank?

They have announced some amount, some plans of tier two capital raising, I would anticipate that may be for this year.