'Markets didn't like the merger': Sashidhar Jagdishan says HDFC Bank 2.0 'will be back with a bang'

HDFC Bank CEO Sashidhar Jagdishan assured a strong comeback for India’s largest private-sector bank post the merger with the housing finance company HDFC, despite 'markets not liking it'.

"The new HDFC Bank 2.0 will be back again with a bang," Jagadishan said at the BT Best Banks awards.

HDFC Bank and ICICI Bank were joint winners in the Bank Of the Year category.

In his speech, Jagadishan said the bank wants to be a part of the $10 trillion opportunity runway the Centre is aiming for. "We are going to be global consumption, production, financial hub and we want to ride on that," he said.

Macquarie in a recent note said it didn't see the opportune time to go long on the lender despite having value. Several hedge funds have tried to cover their short positions in HDFC Bank, but investors, in general, are still not confident of the bank delivering good numbers in the near term, the brokerage said in its note.

HDFC Bank stock tanked over 6 per cent on January 17, steepest in three years, after flat margins posted for the October-December quarter. Suresh Ganapathy of Macquarie had then said it will be "challenging for HDFC Bank to deliver both on margins and costs".

In an earlier interview with Goldman Sachs, Jagdishan had given an overview of the loans and deposits in HDFC Bank’s balance sheet post the merger. “Over the last seven quarters, the last quarter being the seventh, if you take the six quarters, ever since we announced the merger, we realised that with the merger will come a preponement of loans in our balance sheet, which is pretty much reflected in the constitution of the share. We now have around 14 to 15% share of loans on the stock of our balance sheet as against to 10 to 11% of deposits,” Jagdishan said.

The HDFC Bank CEO suggested it was understandable why the housing finance company had less deposits.

“Obviously, they [HDFC Ltd] did not have too much of deposits, was more wholesale or bond funded. Rightfully so, because it was a long-term book and they wanted to have a very matched duration. So they sort of managed it pretty well. Now, that is completely new to us. Obviously, that is something which has now come in,” he said.

But despite all these aspects, he saw the bank continuing the path of profitable growth.