India's best domestic bank 2020: HDFC Bank
Privately owned HDFC Bank – Asiamoney’s best domestic bank in India this year – is on the cusp of a leadership change. Long-serving managing director Aditya Puri is due to step down in October, and the hunt for his successor is on. Puri leaves behind a bank with impeccable credentials, strong financials and corporate governance standards that are the envy of the street.
HDFC reported a return on assets of 1.51% for the nine months ending December 2019, up from 1.39% in the same period in 2018. Its net non-performing asset ratio rose marginally to 0.48% from 0.42% over the same time frame, but is well below that of some peers. Net revenue and net profit rose 21.5% and 27.2% year on year respectively, while the share price climbed about 20% in 2019.
HDFC has a growing investment banking franchise in the face of a choppy environment over the last year, triggered by the default of a non-banking financial company and the liquidity tightening that followed.
Its clients include Vodafone Idea, Larsen & Toubro and Metropolis Healthcare. It had equity capital markets league table credits for about $1.2 billion in 2019, according to Dealogic, giving it a 5.9% market share, and it was involved in some substantial IPOs as well as a multi-billion-dollar rights issue for Vodafone Idea.
While the bank was late to jump on the digitalization bandwagon, future-proofing is now a top priority for HDFC, which has a 50-strong digital transformation unit that focuses only on innovation.
Then there is its private banking division, which boasted assets under management of $23.2 billion as of December 2019 – up an impressive 49% from the previous year. In addition to the traditional vanilla products offered to clients, HDFC Bank boosted its focus on three segments last year: alternative investment products, life insurance and bonds.
The firm also broadened its private banking reach by making headway in a few second-tier cities.