Oct 17, 2026 earnings call — Leadership change and retail deposit momentum
Anup Bagchi named MD and CEO; deposits increased 18.8% year-on-year.
Revenue $5.1B (est $4.9B) · EPS $0.42 (est $0.40)
Key quotes
"Deposits increased 18.8% year-on-year on a reported basis, including a 4 percentage point lift from special FCNR (B) window."
"The pace of retail disbursements is accelerating and has crossed INR 90,000 crores during Q2 FY '27 as against INR 76,000 crores in Q1 of this year."
"As my long innings at HDFC Bank come to an end, I would like to say that it has been an absolute privilege to lead this organization that brings together some of the most brilliant minds in over 200,000 extremely committed and focused professionals."
Analyst Q&A 11
When retail deposit share will rise
Q (Mahrukh Adajania · Tara Capital Partners): They asked when the share of retail deposits will start rising. They also asked about drought effects on agri loans and whether Anup will change HDFC Life strategy.
A: Sashi said the bank is building distribution, simpler product journeys and one-click experiences that should lift retail deposits, but some one-off large outflows have masked this progress. Anup will consult stakeholders and announce his strategy soon. Kaizad said kharif sowing fell only marginally and agri gross NPA has remained steady so far.
"All this in the -- from a foundation and structural perspective is going to have a massive impact as we move forward." — Sashidhar Jagdishan
Why margins fell and cost rose
Q (Kunal Shah · Citi): Why did net interest margin fall even though corporate book growth was not large? Why did interest expense and cost of funds rise sequentially?
A: Srini said cost of funds was flat quarter-to-quarter at about 4.4% because of the mix effect from FCNR and strong growth in time deposits, and AT1 bond call relief was offset by other borrowings. Kaizad said retail and MSME growth is coming back strongly and back-book retail runoff will change margins over the next two quarters.
"You will see that the cost of funds is flat quarter-to-quarter at about 4.4% last quarter to this quarter." — Srinivasan Vaidyanathan (CFO)
FCNR use and near-term margins
Q (Rikin Shah · IIFL Capital): How are FCNR funds being deployed and will they retire wholesale borrowings? Also, how will margins move next quarter with full FCNR impact and what's the loan pricing split?
A: Srini said the FCNR deposits are effectively deployed and that sources and uses largely matched this quarter, noting deposit growth of INR 1,57,000 crores and loan growth of INR 1,58,000 crores. He added about 70% of the loan book is floating so the October 25 bps change should be partly factored by December and overall margin trajectory should be neutral to positive. Sashi said the margin trajectory will be upward from next quarter.
"Rikin, the FCNR deposits, you can take it as deployed because we do need to deploy it as soon as possible." — Srinivasan Vaidyanathan (CFO)
Audio check
Q (Parag Thakkar · Fort Capital): He asked if he was audible.
A: There was no management answer in this exchange; the analyst was only checking audio.
Margins to improve from Q3?
Q (Parag Thakkar · Fort Capital): Is Q2 the bottom for margins and will margins start improving from Q3? Can the bank reprice mix toward higher-yielding loans like peers without hurting asset quality?
A: Srini said the rate cycle began in October and repricing of floating loans will provide a tailwind that should be factored by December, so directionally margins should improve. Kaizad added the bank is returning to retail and MSME growth and will take a calibrated approach to grow higher-yield retail products while maintaining relationships and asset quality.
"You will see us having certainly come back with more vigor on our retail assets and MSME space." — Kaizad Bharucha
Congrats to new CEO
Q (Piran Engineer · CITIC): The analyst offered congratulations to Mr. Bagchi.
A: There was no management answer in this exchange; it was a congratulatory remark from the analyst.
Microphone check
Q (Piran Engineer · CITIC): Operator asked the analyst to speak through the handset because voice was unclear.
A: There was no management answer in this exchange; it was a logistics exchange to fix audio.
MCLR policy and slippages cause
Q (Piran Engineer · CITIC): Why did HDFC cut MCLR more in the last cycle and will it do the same in a hike? Also, is the slippage improvement due to loan mix or better outcomes across cohorts?
A: Srini explained MCLR uses day-end dynamics and includes cost and credit cost outlook, and only a miniscule single-digit portion of the book is priced to MCLR. He said slippages have improved across most portfolios and the absolute slippage numbers show it's a combination of factors, helped by a benign credit environment.
"Having given you all of this theory of what MCLR is, the proportion of our book that is priced to MCLR is miniscule single digit." — Srinivasan Vaidyanathan (CFO)
Hindsight and CASA/pricing view
Q (Chintan Joshi · Autonomous): What guidance would you give the new CEO from hindsight over the last 3–5 years? Also, given CASA hasn't fully returned, are current spreads enough to earn ROE above cost of equity or is repricing needed?
A: Srini said the bank sees room to increase household deposits in many districts where market share is below average and that the distribution offers opportunity to grow retail balances. Sashi said retail CASA ratio is already healthy in the late 40s but the very large balance sheet and substitution of former HDFC Large borrowings required more time deposits; he warned structural household savings shifts are a system issue and said Anup will lay out strategy soon.
"It is in the late 40s, and that's been a kind of an average, which is pretty much stable over a long period of time." — Sashidhar Jagdishan
Staffing trend and liabilities
Q (Nitin Aggarwal · Motilal Oswal): Will headcount stay flat due to digitization, or will hiring rise over the next 2–3 years? And what levers can accelerate liability growth given changing market and LCR?
A: Sashi said technology investments are moving from build to adoption, making processes more straight-through so staff will shift to more frontline roles and headcount may stay flat near term then rise later. Srini added headcount grew about 10% CAGR over 5–6 years with room for more productivity, and Sashi said some one-off outflows forced use of non-retail deposits but liquidity remains comfortable; Anup and team will present plans soon.
"I think the technology investments is on the cusp of being harnessed much more than what we had." — Sashidhar Jagdishan
LCR, CDs, insurance rules, PSL shortfall
Q (Ankit Bihani · Nomura): Will LCR at 113% limit loan growth if deposit mobilization is weak? Why issue CDs actively? What is the likely impact of draft insurance norms on bancassurance income? And how will you close the PSL shortfall?
A: Srini said the bank targets an LCR around 110%–120% (mid 115%), and operating around 113% allows growth; CD issuance is opportunistic. On insurance, he said commission cuts are large and will require examining persistency, volumes and cost structure; on PSL, aggregate achievement is about 50% and the shortfall is in scarce, costly small and marginal farmer assets which the bank buys when available.
"We would like to operate between 110% and 120%, which we have told you over the last few years, somewhere probably in the middle 115%." — Srinivasan Vaidyanathan (CFO)