HDFC Bank’s Q2FY27 earnings call with the media was a historic one of sorts, with the presence of the outgoing managing director & CEO Sashidhar Jagdishan and the incoming CEO Anup Bagchi present in a virtual, audio call.
HDFC Bank has also informed the exchanges on Saturday that bank veteran and deputy managing director Kaizad Bharucha, will step down on December 31, 2026. He has been the longest serving executive board member at HDFC Bank.
Jagdishan, had in August-end, communicated to the bank's board that he would not seek re-appointment for the third term and end his term on October 26, 2026.
While thanking the board, Jagdishan said: “The ethos of the institution will be intact” as Anup comes in “and he will lead a team of able leaders who have been with the institution for a long time below him.” Jagdishan aslso said he did not need to give Bagchi – a veteran of 34 years in the financial services space – any advice in running the bank.’
When specifically asked why he chose not to continue for a third term, Jagdishan said: “I think, sometimes after 31 years, one need to also start to look at life outside of the institution that you have nurtured, you have grown with. It is a personal cal.” Jagdishan said.
The incoming CEO Anup Bagchi, who takes charge on October 27, made a short comment to the media: “Very near term, I am going to engage with all the regulators, customers, stakeholders. I'll gather insights, and that will become a key input to our organizational priorities.”
“I have always seen this group with great admiration. It has a very rich legacy. It has market leadership, and it has reputation within the Indian financial system which are exceptional,” Bagchi said.
“I am very lucky I take over an institution which is solid, very sound, and post-merger the balance sheet transformation that has changed, uh, that is that is in some sense unwinding,” Bagchi said.
HDFC Bank on Saturday reported a standalone net profit of ₹19,509.3 crore for the September-ended quarter (Q2FY27), up 4.7% from a year earlier. Its top line or net interest income (NII) rose 9.7% year-on-year to ₹34,619.2 crore, the bank said.
Its net interest margins continued to slide to new lows of 3.16% for the quarter.
Jagdishan said the margins were low due to “the full impact of the previous quarter’s asset push in terms of the non-retail composition being high, both on the liability side, on the asset side.”
On low CASA ratio in this quarter, Jagdishan said: “This was a combination of the proportion of low-cost flows moving into the banking system, which has been steadily come down thanks to the changing household behavior. That is something that the entire system has to confront, because overall, I think the CASA ratio has, even come down for the system as a whole as well.”
“But to us, it's slightly more heightened because of the fact that we had to take in more time deposits, uh, more than what we normally would have done, because we have a larger proportion of the balance sheet and we have to substitute a fair amount of borrowings that have been maturing over the last three years with time deposits as well. “
On why the bank is not seeing high profit growth despite a strong balance sheet, the Bank’s CFO Srinivasan Vaidyanathan said that that the bank had treasury gains which were higher than what we have realized this year. Normalized for the treasury trading gains, you see the year-on-year profit growth is 12.6%.”
Jagdishan called the post-merger HDFC Bank “a different institution” from the pre-merger one. “The reality is we need to only look at one metric, and that is the either the return on assets or the earnings per share growth,” he said.
The biggest challenge for Bagchi will be to restore credibility, reduce the trust deficit and improve communication of the bank to all its stakeholders and bring the bank back to its growth path,” a banking veteran told Fortune India, on condition of anonymity.
On August 5, at the HDFC Bank’s board meeting, the bank board faced a barrage of questions which related to expansion plans to boost income, corporate governance, succession plans for a new CEO, the financial drag on the Bank after HDFC's merger with the Bank in July 2023 and how to improve margins and CASA.
At an earlier media call, Jagdishan had said that he was excited that the bank will see “new energy” in the coming years.