India's largest private lender HDFC Bank has found itself under heavy scrutiny after being slapped on with a federal securities class action lawsuit in New York.
The action follows allegations that the Indian banking giant orchestrated a covert scheme to illegally inflate interest payouts to a state government agency by disguising them as marketing expenses.
If that was not enough, the bank has still not declared who will be the Chief Executive Officer after Sashidhar Jagdishan's term ends in October.
While recent source-based media reports claim that Chairman Rajiv Kumar met Reserve Bank of India (RBI) Governor Sanjay Malhotra last week to discuss the status of MD & CEO Sashidhar Jagdishan's possible reappointment, there is no official confirmation from HDFC Bank itself.
Earlier reports had indicated that the bank's Governance, Nomination and Remuneration Committee (GNRC) was expected to recommend his reappointment for a third term without significant opposition.
ALSO READ: HDFC Bank Faces Class Action Lawsuit In US Over Alleged Bribery Scheme
However, HDFC Bank did not reveal any information in regulatory filings where financial results for the first quarter of fiscal 2027 were approved and declared.
Results for the June quarter presented a mixed bag with subtle growth in net profit and NII, but decline in the net interest margin and worsening of asset quality.
Notably, beyond the Q1 performance, India's largest private lender seemed to have trailed behind peer ICICI Bank under Jagdishan's term, who was appointed as the Managing Director & CEO of HDFC Bank effective 27 October 2020.
The compound annual growth rate for NII has been 10% for the lender, as compared to 18% for ICICI Bank. Bottom-line CAGR has grown 12% since FY21 for HDFC Bank, as against ICICI Bank's 25%.
Besides this, other key metrics like HDFC Bank's net interest margin has fallen 70 basis point, compared to a rise of 63 bps for ICICI Bank. The bank's asset quality has improved only by 23 bps, while ICICI's has improved by 81 bps.
HDFC Bank's Return on Equity has taken a hit and was down 270 basis points by the end of the last fiscal, whereas ICICI Bank's RoE has remained robust and was up 580 bps.
Return on assets (RoA) declined by 10 basis points at HDFC Bank between FY21 and FY26, while ICICI Bank's RoA improved by 104 basis points over the same period.
| CAGR Growth Over FY21-26 | HDFC Bank* | ICICI Bank |
|---|---|---|
| NII (%) | 10 | 18 |
| PAT (%) | 12 | 25 |
| Advances (%) | 12 | 17 |
| NIM Change (bps) | -70 | 63 |
| Net NPL Change (bps) | -23 | -81 |
| RoA Change (bps) | -10 | 104 |
| RoE Change (bps) | -270 | 580 |
| (*base year adjusted for merger of HDFC and HDFC Bank) |
(Source: NDTV Profit Research)
HDFC Bank Share Price
HDFC Bank shares fell over 2.3% to an intraday low of Rs 710 on the NSE on Thursday. The stock pared some losses to trade 1.47% lower at Rs 716.50 apiece, as against a marginal decline in the Nifty index.
The scrip has fallen over 27% year-to-date and 26.34% in the last 12 months.
ALSO READ: HDFC Bank Calls US Class Action 'Without Merit', Says It Will Vigorously Defend Itself
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