After the successful merger with its parent company HDFC, HDFC Bank’s Managing Director and Chief Executive, Sashidhar Jagdishan, has set forth an ambitious goal for the country’s largest lender. Jagdishan stated that the bank aims to double its size every four years, a target that has sparked interest among investors and market analysts alike.
In a letter addressed to the more than 4,000 employees who transitioned from HDFC to HDFC Bank as part of the merger, Jagdishan articulated his optimism about the future. He emphasized that the work to realize the potential of the merger has now begun and highlighted the bright prospects that lie ahead.
“The runway for financial services and mortgage, which are so underserved and underpenetrated, is going to be very large. HDFC Bank – the combined entity – with a large and growing distribution and customer franchise, more than adequate capital, healthy asset quality, and profitability, will be best positioned to capture growth. The pace at which we aim to grow – we could be creating a new HDFC Bank every 4 years,” Jagdishan asserted.
The merger brought about a significant change in the bank’s visual identity, with HDFC Bank embarking on a rebranding exercise. This involved prominently displaying the bank’s colors across all of the over 500 branches and offices of HDFC Ltd. Within the first day after the merger, the rebranding process had already begun, and it is anticipated to conclude within the next 24 hours.
The meticulously planned merger has witnessed dedicated teams working diligently since its announcement on April 4 of the previous year. As part of the monumental USD 40 billion all-share deal, the largest in Indian corporate history, HDFC Bank had committed to absorbing all the employees of its parent company HDFC.
“Our work starts from today, in realizing the potential of what this merger holds for us,” Jagdishan emphasized. To achieve its growth targets, the bank is poised to expand by adding around 1,500 branches each year, allowing it to better serve the middle class and upper segments of the country’s population. The bank will also continue to invest in digitalization, aiming to transform HDFC Bank into a “technology company into banking.” This transformative journey is expected to unfold over the next three years.
Jagdishan outlined that HDFC Bank’s approach to evaluating its workforce will be centered on governance and compliance, teamwork, and the ability to provide exceptional customer experiences. He affirmed that the merger provides a canvas of significant opportunities, both professionally and personally, for the employees of HDFC Ltd. The seamless integration of employees into the hierarchy was guided by external experts, ensuring an effective induction process.
In his communication, Jagdishan acknowledged the notable leadership of Deepak Parekh, Keki Mistry, and Renu Karnad, and praised their role in creating a remarkable institution. He emphasized that the low cost-to-revenue ratio of HDFC Ltd, which stands at 0.04 per cent, is the lowest among mortgage companies globally.
Looking ahead, Jagdishan identified the immense potential within the home loan segment, which is often characterized by strong emotional connections between lenders and borrowers. He noted that HDFC Bank aims to harness these connections to foster growth, particularly due to the currently low penetration levels of home loans within its customer base.
As the merger facilitates HDFC Bank’s transition from sales management to a relationship management model, the bank will capitalize on cross-selling opportunities. This will be made possible by integrating mortgage finance, insurance, and asset management subsidiaries under the HDFC Bank umbrella. Jagdishan emphasized that this bundling approach will revolutionize the velocity of product sales and customer service.
The merger between HDFC Ltd, the parent company, and HDFC Bank has not only redefined the landscape of the Indian banking sector but also set the stage for a dynamic future. With a clear vision and a strategy rooted in innovation, HDFC Bank is poised to leverage its strengthened position to achieve impressive growth, affirming its status as a financial powerhouse in the years to come.
