HDFC group says yet to consider merger plan

Mumbai : HDFC chairman Deepak Parekh termed as premature the speculation about a merger between the mortgage major and its banking arm HDFC Bank but said that the entities may look at the possibility if it is a “win-win” situation.

“Both the companies’ boards have not considered it and at the appropriate time if it is necessary and beneficial to both share-holders, if it is a win-win, then we will look at it,” he said, addressing company share-holders at the annual general meeting here.

The mortgage lender reported nearly 10% rise in consolidated net profit at Rs 1,872.9 crore for the first quarter ended June 30. The company had posted consolidated profit of Rs 1,707.1 crore in the April-June quarter in the previous fiscal.

Total income (consolidated) increased to Rs 10,056.07 crore for the quarter ended June 30, 2014 from Rs 8,482.85 crore for the quarter ended June 30, 2013. HDFC posted a 14.6 % rise in its standalone net profit at Rs 1,344.66 crore for the first quarter. The company had posted profit of Rs 1,173.1 crore during the corresponding quarter (April-June) in previous fiscal.

“Total income has increased from Rs 5,564.94 crore for the quarter ended June 30, 2013 to Rs 6,461.24 crore for the quarter ended June 30, 2014,” it said in a regulatory filing to the BSE. As at June 30, 2014, the loan book of the lender stood at Rs 2.03 lakh crore as against Rs 1.77 lakh crore in the previous year. “This is after considering the loans sold during the preceding 12 months amounting to Rs 6,980 crore,” it said.

Keki Mistry, the vice-chairman and managing director of HDFC, said such a move has “theoretical” advantages like savings on CRR (cash reserve ratio) and SLR (statutory reserve ratio) requirements after the RBI liberalised its policies last week and putting the excess capital of parent HDFC to good use.

“Because of the reduction in CRR and SLR on existing funds, yes, if you were to work out the numbers, probably it may be a little bit better but we will have to do the arithmetic. It is something which the boards will have to look at in the future, whenever that is,” Mistry said. “Theoretically, if there is a merger, HDFC has an excess capital and that capital can be better utilised,” he added.

HDFC Bank deputy managing director Paresh Sukthankar, addressing the media at the bank’s first quarter earnings, also said as of now, nothing has been discussed but admitted to the advantages of merger.

According to a report by the domestic brokerage IDFC Securities, if merged, the new entity will be second only to SBI.

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