HDFC Bank-HDFC merger: PFRDA approves proposal of promoter change in HDFC Life

HDFC Bank on Saturday announced that al from Pension Fund Regulatory and Development Authority (PFRDA) has approved the proposal for change in the promoter of HDFC Life Insurance. HDFC which is the parent company of HDFC Life will merge with HDFC Bank in due course of time. This will be the merger of India's largest housing finance company with the largest private bank.

PFRDA granted the approval on November 11.

In its regulatory filing, HDFC Bank said, "we wish to inform you that PFRDA vide its letter dated November 11, 2022 to HDFC Life, has granted its approval for proposed change in shareholding of HDFC Life, sponsor of HDFC Pension due to proposed amalgamation i.e. change in promoter from HDFC Limited to HDFC Bank."

HDFC Bank-HDFC merger remains subject to various statutory and regulatory approvals including NCLT and respective equity shareholders of the bank and other companies involved in the scheme.

Under the scheme of the arrangement, the subsidiaries of HDFC will become subsidiaries of HDFC Bank. Further, shareholders of HDFC will receive 42 shares of HDFC Bank (each of face value of Re 1) on the record date --- for 25 shares held in HDFC (each of face value of ₹2). And then the equity shares held by HDFC in HDFC Bank will be extinguished as per the Scheme.

HDFC is India’s premier housing finance company and has unrivaled relationships, scale, and deep underwriting expertise in the housing sector, built over multiple decades and across economic cycles.

HDFC Bank-HDFC merger is expected to create a large balance sheet and net worth that would allow a greater flow of credit into the economy. It will also enable the underwriting of larger ticket loans, including infrastructure loans -- an urgent need of the country.

This week, on Friday, HDFC Bank shares closed at ₹1,610.95 apiece up by 5.62% on BSE. Meanwhile, HDFC shares ended at ₹2,651.25 apiece higher by 5.84%.

In Q2FY23, HDFC Bank posted a net profit of ₹10,606 crore rising by 20% yoy, while net interest income (NII) stood at ₹21,021 crore surging by 19% yoy. Its gross NPA improved to 1.23% in Q2FY23 versus 1.28% in Q2FY22. The bank posted a growth of 23.4% yoy in total advances to ₹1,479,873 crore, while total deposits climbed by 19% yoy to ₹1,673,408 crore

Meanwhile, HDFC garnered a net profit of ₹4,454. 24 crore in Q2FY23 registering a growth of 17.8% yoy, while NII came in at ₹4,639 crore up by 12.9% yoy. In the half-year that ended September 30, 2022, HDFC's 92% of new loan applications were received through digital channels. Further, the average size of individual loans stood at ₹35.7 lakh compared to ₹33.1 lakh in FY22. Also, the collection efficiency for individual loans on a cumulative basis stood at over 99% during the quarter that ended September 30, 2022. HDFC's assets under management (AUM) came in at ₹6,90,284 crore as of September 30, 2022.