HDFC Bank Board Endorses Keki Mistry's Reappointment as Chairman

HDFC Bank Hopes Keki Mistry's Interim Tenure Could Extend Beyond Three Months

Mumbai: HDFC Bank's senior management remains optimistic that the appointment of Keki Mistry as interim part-time chairman could extend beyond the initial three-month timeline, according to managing director and chief executive officer Sashidhar Jagdishan. Speaking during the bank's March quarter earnings call on April 18, Jagdishan stated that while there is support within the executive leadership for Mistry's continuation, the final decision rests with the board and its nomination and remuneration committee (NRC).

The bank's management is rooting for Mistry, a veteran of HDFC Bank, but acknowledges that certain processes need to be concluded before his appointment can be put forward for deliberation. The outcome remains open-ended, and the board's decision will ultimately determine Mistry's tenure.

The appointment of Mistry as interim chairman followed the sudden resignation of former part-time chairman Atanu Chakraborty on March 18. Chakraborty cited "certain happenings and practices within the bank" that were not in congruence with his personal values and ethics, prompting questions on oversight and internal controls at the country's largest private bank.

| Quarter | Loan Growth | Deposits | | --- | --- | --- | | Q4 FY23 | 12% | ₹3.91 trillion (14% YoY growth) | | Q3 FY23 | 5.4% | ₹3.17 trillion |

The bank has approved the appointment of external law firms to conduct a review of Chakraborty's resignation letter, which did not mention any specific happenings or practices that were not in congruence with his personal values and ethics. Jagdishan stated that the legal review is in process and will be completed as soon as possible, after which the bank will provide a summary of the findings.

The leadership transition comes at a time when the bank is managing parallel developments, including the Dubai AT1 bond-related matter. The National Consumer Disputes Redressal Commission (NCDRC) ruled on March 23 that the complainants were not retail or uninformed investors, but rather had a clear intent to pursue high-yield, high-risk investment products. The bank also clarified that India is not the jurisdiction for the complaint, suggesting that the issue may proceed in overseas courts.

Despite governance questions remaining in focus, the bank's operating performance continues to show resilience. For the quarter ended March, the bank's loan growth rose by 12% on year to ₹3.17 trillion, higher than the 5.4% on year growth witnessed in the previous year. Deposits continued to outpace credit, with ₹3.91 trillion, up over 14% on year.

When asked if the management continues on its glide path to exceed industry credit growth levels for FY27, Jagdishan refrained from giving any numerical outlook due to uncertainties arising from the ongoing West Asia war. However, he stated that the positive momentum would continue, albeit with a marginal impact from the geopolitical situation. Certain medium, micro, and small enterprise segments may face temporary stress due to the ongoing conflict.

On margins, the management expects net interest margin of the bank to remain range-bound in the near-term. In Q4, the bank's NIM was 3.38%, up from 3.35% a quarter ago. Net interest income of the bank rose over 3% on year and 1% on quarter to ₹33,080 crore.

Overall, improvement in asset quality, lower provisions, and strong loan growth lifted the lender's net profit to ₹19,220 crore, up over 9% on year and 3% on quarter, higher than expectations of ₹19,053 crore PAT estimated by Bloomberg.