Chennai

Moderation in net interest margin (NIM), funding are the major challenges to be faced by HDFC Bank after the merger of parent and housing finance company HDFC Ltd, a senior bank official.

Addressing the HDFC Bank shareholders at the annual general meeting (AGM) on Friday, Sashidhar Jagdishan, MD and CEO said, the second quarter of FY24 will see NIM moderating owing to HDFC (housing loan company that was recently merged with the bank) had lower spreads.

On the positive side, the loan repayments are good in the case of housing loans hence the credit costs will be lower for the bank, he added.

According to him, the HDFC Bank has been reporting NIM between 4–4.4 per cent and the moderation will be seen in the second quarter results. Jagdishan said only few customers of the bank have availed home loans from HDFC and there is immense potential to tap this segment.

The bank has got the shareholder’s approval for raising Rs 50,000 crore from bond issue. It should be noted that the Reserve Bank of India (RBI) has refused HDFC Bank exemptions from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) and the deposits that came from HDFC as part of the merger.

With the RBI’s Monetary Policy Committee (MPC) has imposed Incremental CRR (ICRR) of 10 per cent on deposits received by banks between May 19-July 28 with would suck up funds further.