#1Investor Presentation Housing Development Finance Corporation HDFC WITH YOU, RIGHT THROUGH#2CONTENTS • Who we Are • Material Developments • HDFC Snapshot • Mortgage Market in India • • . • . Operational and Financial Highlights: Mortgages Shareholding Financials: Standalone Key Subsidiaries and Associates Financials: Consolidated Environmental, Social & Governance & Other Initiatives HDFC WITH YOU, RIGHT THROUGH 2#3• • WHO WE ARE... HDFC Market capitalisation*: US$ 57 bn HDFC WITH YOU, RIGHT THROUGH Incorporated in 1977 as the first specialised mortgage company in India A financial conglomerate with interests beyond mortgages 69% shares held by foreign investors 21.00% 47.81% HDFC BANK Market capitalisation*: US$ 107 bn ADRs listed on NYSE HDFC Life Market capitalisation*: US$ 15 bn Ranks 2nd in overall new business premium amongst private players 52.60% HDFC MUTUAL FUND Market capitalisation*: US$ 6 bn Ranks amongst the top 3 AMCs with total AUM of US$ 57 bn 49.98% HDFC ERGO Ranks amongst the top 3 private players in general insurance *As at March 31, 2022 US$ amounts converted based on exchange rate of US$ 1 = Rs. 75.90 100% 100% <> HDFC SALES Financial services distribution company Sources more than half of HDFC's home loans HDFC CREDILA The Education Loan Specialist India's first dedicated education loan company with outstanding loan book of US$ 1.2 bn 100% GHDFC PROPERTY FUND HDFC CAPITAL Property funds: of which US$ 3 bn is committed for development of affordable housing 3#4MATERIAL DEVELOPMENTS HDFC WITH YOU, RIGHT THROUGH#5Li HDFC WITH YOU, RIGHT THROUGH MATERIAL DEVELOPMENTS Proposed Transformational Combination of HDFC with HDFC Bank On April 4, 2022, the Board of Directors of HDFC and HDFC Bank at their respective meetings, approved a composite scheme of amalgamation (Scheme) for: ■ The amalgamation of HDFC's wholly owned subsidiaries, HDFC Investments Limited and HDFC Holdings Limited, with and into HDFC; and HDFC with and into HDFC Bank Subsidiary/associates of HDFC Limited will become subsidiary/associates of HDFC Bank • Shareholders of HDFC as on the record date will receive 42 shares of HDFC Bank (FV Re. 1 each) for 25 shares of HDFC (FV Rs. 2 each) ⚫ HDFC's shareholding in HDFC Bank will be extinguished upon the Scheme becoming effective • Post the above, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of HDFC Bank . Transaction completion is subject to shareholders, creditors and regulatory approvals as applicable 5#6HDFC WITH YOU, RIGHT THROUGH RATIONALE Proposed Transformational Combination of HDFC with HDFC Bank • The option to merge has been evaluated from time to time • In the recent period, various regulatory changes for banks and NBFCs have considerably reduced the barriers for a potential merger: • Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) of banks have reduced from 27% to 22% . • Prevailing interest rates give spreads on reserves RBI permits Priority Sector Lending Certificates to meet Priority Sector Lending (PSL) norms Long tenor infrastructure & affordable housing bonds are exempt from CRR, SLR and PSL • Recent harmonisation of regulations between banks and NBFCs: RBI roadmap for conversion of large NBFCs into full scale commercial banks Harmonisation of asset quality norms Introduction of Liquidity Coverage Ratio for NBFCs Scale Based Regulations - especially for NBFCs categorised as NBFC Upper Layer Further alignment of regulations for NBFCs with banks on: Capital assessment, risk, compliance, large exposure framework, remuneration, core financial services solution, amongst others 6#7BENEFITS OF A COMBINED ENTITY Proposed Transformational Combination of HDFC with HDFC Bank • Synergies • • HDFC WITH YOU, RIGHT THROUGH Access to lower cost of funds Wider distribution network; presently HDFC Bank does not source mortgages from all its offices HDFC Bank to have access to 45 years of expertise in mortgage origination and loan servicing processes of HDFC Operational efficiencies: will be able to offer the mortgage product seamlessly Cross-selling: 70% of HDFC customers do not bank with HDFC Bank; of the 68 million customers of HDFC Bank, only 8% have a mortgage and only 2% have a mortgage from HDFC Overcome issues of a holding company discount Cancellation of shares of HDFC Bank held by HDFC will be EPS accretive for HDFC Bank; provide leg room for foreign shareholding (HDFC's equity in HDFC Bank qualifies as indirect foreign investment) Through mortgages, HDFC Bank will get longer duration assets on its books HDFC Bank can build a housing loan portfolio and enhance product offerings to its existing customer base • Overcome drag on Return on Equity 7#8HDFC SNAPSHOT. HDFC WITH YOU, RIGHT THROUGH Amount Value 6% 20% O/Confirmed Au/22025 Me2200 8% ANALYSIS 2 ANA 22% ** YI JU#9BUSINESS SUMMARY • Loans Outstanding (Gross loans) (As at March 31, 2022) HDFC WITH YOU, RIGHT THROUGH Rs. 6,539.02 bn : US$ 86.15 bn • Individual Loans Originated CAGR (5 years) : 16% • Cumulative Housing Units Financed : 9.3 million : 8.1% • • Cost to Income Ratio (excluding notional cost of Employee Stock Option Scheme & Corporate Social Responsibility Expenses) Unaccounted gains on listed investments in subsidiary and associate companies Consolidated Profit After Tax CAGR (5 years) Rs. 2,342.48 bn US$ 30.86 bn : 15% 9#10HDFC WITH YOU, RIGHT THROUGH • • • • • IMPACT OF COVID-19 Q1 FY22 witnessed an eruption of a second wave of Covid-19 in India. Post that, there was a sharp recovery in business. In Q4 FY22, the third wave of Covid-19 resulted in a rise in infections, but with considerable less severity and did not result in any material impact on business The demand for housing continues to remain strong Approvals and disbursements grew by 38% and 37% respectively in FY22 Scale up on all digital platforms for borrowers, depositors, channel partners and deposit agents, amongst others ■ 91% of new loan applications were received through the digital mode 67% of retail deposits digitally on-boarded Credit costs for the year stood at 33 basis points compared to 56 basis points in the previous year Total loans restructured under the RBI's Resolution Framework - OTR 1.0 & 2.0, amounted to 0.80% of the loan book. ■ The largest restructured account under the resolution framework of Rs 27.64 billion was fully repaid as at March 31, 2022. 10 10#11• HIGHLIGHTS - Q4 FY22 Continued momentum in housing sales, especially across major metros HDFC WITH YOU, RIGHT THROUGH • Increase in new project launches in the mid range and luxury market segment • • • • • Highest ever monthly individual housing loan disbursements in the month of Mar-21 The collection efficiency for individual loans on a cumulative basis stood at over 99% during the quarter ended March 31, 2022 Improvement in individual non-performing loans: 0.99% (Q3: 1.44%), based on new norms i.e. Reserve Bank of India's November 12, 2021 notification ■ Based on earlier norms, individual non-performing loans: 0.78% (Q3: 1.14%) Reduction in aggregate of Stage 2 and Stage 3 assets to 6.7% of the Exposure at Default as at March 31, 2022 from 9.2% in June 30, 2021 Credit costs trended downwards each quarter -- Q4: 0.27% compared to 0.50% in Q1 • Higher growth in net interest income at 14% 11#12HDFC WITH YOU, RIGHT THROUGH MORTGAGE Click here for more information NEXT MORTGAGE MARKET IN INDIA D 9 2 11 9 P&B . 4 9 4 4 C e 4 3117 2 2 3 O L 41 NO 9 9 K L i 2 return N 1 NA shuty eplion#13DRIVERS OF MORTGAGE GROWTH . Improved Affordability • Low Penetration • Government Incentives ■ Enhanced Fiscal Benefits ■ Incentives for Affordable Housing Other Demand Drivers HDFC WITH YOU, RIGHT THROUGH 13#14Property Value (Rs. 100,000) & Affordability IMPROVED AFFORDABILITY Best affordability in 2.5 decades Government support towards housing has helped improve affordability 60 50 40 40 30 21.7 20 20 10 10 Lī HDFC WITH YOU, RIGHT THROUGH 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2009 2010 2011 2012 Affordability Annual Income Affordability equals property prices by annual income 2013 2014 2015 2016 2017 2018 5.1 4.5 4.7 4.8 4.6 4.7 4.6 4.4 4.1 3.8 3.7 3.5 3.3 3.2 3.2 2019 2020 2021 2022 0 1995 1996 1997 1998 1999 2000 15.6 11.1 8.3 Property Cost Representation of property price estimates Based on customer data 2001 2002 6.6 5.9 2003 2004 5.3 5.1 4.7 2005 2006 2007 4.3 4.7 5.0 5.1 2008 Annual Income (Rs. 100,000) 14#15LOW PENETRATION IMPLIES ROOM FOR GROWTH MORTGAGES AS A PERCENT OF NOMINAL GDP 100% 80% 60% 40% 20% 0% India 11% China 89% 83% 68% 52% 56% 45% 44% 39% 34% 18% 20% Thailand Malaysia Japan Singapore Germany USA Australia Source: European Mortgage Federation, Hofinet & HDFC estimates for India. Note: India's lower GDP resulted in an increase in the mortgage to GDP ratio. UK Denmark Netherlands 15 HDFC WITH YOU, RIGHT THROUGH#16GOVERNMENT/REGULATORY INITIATIVES Government Incentives Liquidity Measures HDFC WITH YOU, RIGHT THROUGH Supply Side Incentives Tax incentives on interest and principal amount for home loan borrowers Increased budget allocations for housing for affordable housing Special refinance facilities for Non-Banking Financial Companies - Housing Finance Companies Incentives to developers to build affordable housing 'Infrastructure' status accorded to affordable housing External Commercial Borrowings/Rupee Denominated Bonds Issued Overseas 16#17TAX INCENTIVES HAVE LOWERED THE EFFECTIVE RATES ON MORTGAGES HDFC WITH YOU, RIGHT THROUGH FY 2022 FY 2002 FY 2000 Loan amount 3,300,000 3,300,000 3,300,000 Nominal Interest Rate (%) 6.70% 10.75% 13.25% Max deduction for interest allowed 200,000 150,000 75,000 Deduction on principal 150,000 20,000 20,000 Tax rate 30.90% 31.50% 34.50% Tenor (years) 20 20 20 Total amount paid per year 371,100 359,400 421,068 Interest component 221,100 354,750 437,250 Principal repaid 150,000 4,650 (16,182) Tax amount saved 108,150 53,550 32,775 Effective interest paid on home loan 112,950 301,200 404,475 Effective interest on home loan 3.4% 9.1% 12.3% 17#18HDFC WITH YOU, RIGHT THROUGH OTHER DEMAND DRIVERS • Favourable Demographics: 66% of India's population is below 35 years of age, hence large potential for home loans • Nuclear Households: Rise in the number of households with a shift towards nuclear families • Urbanisation: Currently 32% of the Indian population reside in cities; estimated to be 40% by 2030 • Interest Rates: Improved affordability through rising disposable incomes and lowest ever interest rates on home loans 18#19HDFC WITH YOU, RIGHT THROUGH www Paytona AT Matistic 2124 13,678 $0.789 2020 2021 OPERATIONAL & FINANCIAL HIGHLIGHTS: MORTGAGES 11,892 Total Sates#20CORE BUSINESS - LENDING (As at March 31, 2022: Gross Loans - US$ 86.15 bn) INDIVIDUAL LOANS ⚫ Home Loans- Fixed rate loans Individuals 79% Floating rate loans • Home Improvement Loans • Home Extension Loans • Home Equity Loans • Rural Home Loans HDFC WITH YOU, RIGHT THROUGH Corporate 5% Construction Finance 9% Lease Rental Discounting 7% • Loans to NRIs Individuals Corporate Construction Finance Lease Rental Discounting Loan Book Outstanding Loan Book o/s Before Sell Down As at March 31, 2022 Assets Under Management (After Sell Down) in last 12 months Rs. bn US$ bn % Growth Rs. bn US$ bn % Growth Rs. bn Individuals Non-Individuals Total 4,316 57 17% 4,600 61 25% 5,154 US$ bn % Growth 68 17% 1,368 18 6% 1,383 18 7% 1,385 18 7% 5,684 75 14% 5,983 79 20% 6,539 86 15% Individual loans sold (outstanding):. Rs. 838.80 bn (US$ 11.05 bn) 20#21HOUSING ACROSS INCOME GROUPS Housing Loan Approvals Based on Income Slabs FY22 In Value terms HIG 45% MIG 42% In Number terms LIG / EWS 13% MIG 48% HDFC WITH YOU, RIGHT THROUGH O HIG 23% LIG / EWS 29% Economically Weaker Section: Up to Rs. 0.3 mn p.a Middle Income Group: Above Rs. 0.6 mn to Rs. 1.8 mn p.a. Low Income Group: Above Rs. 0.3 mn to Rs. 0.6 mn p.a. High Income Group: Above Rs. 1.8 mn p.a. Housing Loans to EWS & LIG Segments • • 29% of home loan approvals in volume terms and 13% in value terms has been to the EWS & LIG segments Average home loan - EWS: Rs. 1.12 mn, LIG: Rs. 1.97 mn Credit Linked Subsidy Scheme (CLSS): HDFC has the highest number of beneficiaries at over 310,000, with cumulative disbursements of Rs. 521 bn and a subsidy amount of Rs. 72 bn. 21 21#22INDIVIDUAL LOANS: FY22* Employment Employed 78% Self- Employed Acquisition Mode First Purchase 55% Self- construction 8% 0 (incl: professionals) 22% Resale 37% Employed Self-Employed (incl: professionals) *Based on value of approvals HDFC WITH YOU, RIGHT THROUGH Geographic Spread West 35% North 27% South 34% East 4% Resale Self-construction First Purchase East West North South 22 22#23SCALE & SPEED THROUGH DIGITALISATION . Growing trend of digital on-boarding of customers HDFC WITH YOU, RIGHT THROUGH • • • • • Reimagined on-boarding journey with both, mobile and web Digital on-boarding enabled for channel partners Customers digitally on-boarded and go through a paperless approval process Use of QR codes to help customers access the digital platform 91% of new loan customers and 67% retail deposits on-boarded digitally Focused targeting and lead nurturing across multiple digital channels/platforms using SaaS based marketing solutions, thereby increasing effectiveness of marketing campaigns Use of technology solutions and fintech integrations at various stages of underwriting, enabling speedy processing of applications and fraud detection Machine Learning (ML) based lead scoring model Advanced conversational chatbot with Natural Language Processing (NLP) and ML technology, backed by live chat to address customers' servicing and new loan requirements 24X7 HDFC's website in six vernacular languages, besides English to serve the needs of customers in Tier II, Tier-III cities and rural areas 23#2482% OF OUR MORTGAGES ARE SOURCED BY OURSELVES OR THROUGH OUR AFFILIATES HDFC WITH YOU, RIGHT THROUGH March 31, 2022 Other Direct Selling Agents 18% HDFC Bank 28% DIGITAL CHANNELS FOR CUSTOMERS • Using digital and social media marketing strategies and tools to reach out to customers •⚫ Lifecycle management for upselling and cross-selling products to HDFC's existing customers using advanced predictive analytical tools and marketing automation platforms • Customer queries and service requests fulfilled through 'Customer Connect' - HDFC's digital servicing platform Direct Walk-ins 2% Deposit & loan products offered at several locations through outreach programmes. Total number of offices: 675 which is inclusive of 211 outlets of HDFC Sales Limited HDFC Sales Private Limited 52% 24 24#25· . • • OUR CONSERVATIVE LOAN PROFILE UNDERLIES OUR HIGH CREDIT QUALITY Average Loan Size Average Loan to Value Average Loan Term Average Age Primary Security Repayment Type : Rs. 3.30 mn (~US$ 43,500) : 70% (at origination) : 12 years : 38 years : Mortgage of property financed : Amortising HDFC WITH YOU, RIGHT THROUGH 25#26Percentage HDFC WITH YOU, RIGHT THROUGH GROSS NON-PERFORMING LOANS(NPLs) & PROVISIONS CARRIED As per RBI's Revised Norms (i.e. November 12, 2021) 3.00% 2.00% 1.00% 2.62% 2.45% 2.32% 2.38% 1.98% 1.91% As at March 31, 2022 (Rs. in bn) NPLs (90 days): 107.41 Provisions Carried: 135.06 0.00% Mar-21 * ■GROSS NPLs Dec-21 Mar-22 ■PROVISIONS CARRIED AS % OF EAD** NPLs As at Mar 31, 2022 As at Dec 31, 2021 As at Mar 31, 2021 *As at March 31, 2022: Individual Loans 0.99% 1.44% 0.99% • Based on the earlier norms, the NPAs are as follows: Individuals: 0.78% Non-Individual Loans 4.76% 5.04% 4.77% • Total NPLs: 1.74% Overall NPLs 1.91% 2.32% 1.98% *Mar-21 NPLs are not comparable due to change in classification norms by the Reserve Bank of India in Nov-21. Dec-21 and Mar-22 are based on RBI's Nov. 12, 2021 circular - daily stamping of NPLs & upgradation of NPLs less than 90 dpd to standard accounts provided all outstanding dues are fully repaid. **EAD: Exposure at Default 26#27EXPECTED CREDIT LOSS (ECL) BASED ON EXPOSURE AT DEFAULT (EAD) HDFC WITH YOU, RIGHT THROUGH As per IndAS Exposure at Default Stage 1 Stage 2 Stage 3 Mar-22 Dec-21 Mar-21 93.3% 92.2% 91.4% 4.4% 5.1% 6.3% 2.3% 2.7% 2.3% Coverage Ratio (ECL/EAD) Stage 1 0.26% 0.27% 0.24% Stage 2 20.35% 17.05% 18.64% Stage 3 54.33% 48.93% 52.07% ECL/EAD 2.38% 2.45% 2.62% 27 22#28Percentage MULTIPLE SOURCES OF BORROWINGS (As at March 31, 2022: Total Borrowings - US$ 65.83 bn) HDFC WITH YOU, RIGHT THROUGH 100% 4% 3% 3% 80% 43% 42% 40% External Commercial Borrowings ■Debentures & Securities 60% Term Loans 40% 21% 21% 25% Deposits 20% 32% 34% 32% 0% Mar-20 Mar-21 Mar-22 Total Borrowings: Rs. 4,996.81 bn (US$ 65.83 bn) 28#29LOAN SPREADS HDFC WITH YOU, RIGHT THROUGH 12.00% 2.40% 10.29% 10.18% 10.00% 8.99% 2.35% 2.30% 8.06% 2.29% 8.00% 2.27% 2.30% ◇ 2.29% 6.00% 2.25% 4.00% 7.99% 7.91% 2.20% 6.70% 5.77% 2.00% 2.15% 0.00% 2.10% FY19 FY20 FY21 FY22 Return on Loans FY22 Spread earned on: Individual Loans 1.93% Non-individual Loans 3.40% Loan Book 2.29% Cost of Borrowings >Spread 29 29#30Rs. in billion MATURITY PROFILE (As at March 31, 2022) 3,500 3,000 2,500 2,000 1,424 1,500 1,151 1,000 500 2,879 2,712 2,546 2,106 0 Up to 1 yr >1-5 yrs Over 5 yrs Assets ■Liabilities The above graph reflects adjustments for prepayments and renewals in accordance with the guidelines issued by the regulator. HDFC WITH YOU, RIGHT THROUGH 30#31PRODUCTIVITY RATIOS Mar-22 Mar-21 Number of employees 3,599 3,226 Number of outlets 464 390 Profit per employee (US$ '000)* 501 491 Assets per employee (US$ mn) 22.7 22.5 Admin costs/assets (%)^ 0.23 0.21 Cost income ratio (%)^ 8.1 7.7 ^Excluding notional cost of ESOS and CSR expenses HDFC WITH YOU, RIGHT THROUGH 31#32KEY FINANCIAL METRICS HDFC WITH YOU, RIGHT THROUGH Mar-22 Mar-21 Net Interest Margin (%) 3.5 3.5 Pre-Tax RoAA (%) 2.9 2.8 Post Tax RoAA (%) 2.3 2.3 Return on Tier 1 Capital (%) 15.0 14.8 Capital Adequacy (%) 22.8 22.2 Of which Tier 1 (%) 22.2 21.5 Tier II (%) 0.6 0.7 22 32#33200 VALUATION & 0.95 SHAREHOLDING 210.95 149.16 23.26 18:92 1.41% HDFC WITH YOU, RIGHT THROUGH 208.87 +23501- 0.00 25,187.70 12.358 73 27.598 419 May June Ng Sep#34VALUATION – METHOD 1 • Number of shares outstanding: 1.81 billion • Share Price (CMP as at March 31, 2022): Rs. 2,390 • Market Capitalisation: Rs. 4,333 billion (~US$ 57 bn) Particulars Rs. bn US$ bn Net Worth 1,203 15.8 Add: Unaccounted gains on strategic 2,342 30.9 listed investments Add: Unaccounted gains on unlisted 258 3.4 investments Adjusted Networth 3,803 50.1 Market Capitalisation 4,333 57.1 Adjusted Price to Book Ratio 1.1 1.1 HDFC WITH YOU, RIGHT THROUGH 34#35• . VALUATION – METHOD 2 - Number of shares outstanding: 1.81 billion. Share Price (CMP as at March 31, 2022): Rs. 2,390 Market Capitalisation: Rs. 4,333 billion (~US$ 57 bn) Particulars Rs. bn US$ bn Market Capitalisation 4,333 57.1 Less: Unaccounted gains on strategic 2,342 30.9 listed investments Less: Unaccounted gains on unlisted 258 3.4 investments Adjusted Market Capitalisation 1,733 22.8 Net Worth (adjusted for dividend) 1,203 15.8 Adjusted Price to Book Ratio 1.4 1.4 HDFC WITH YOU, RIGHT THROUGH 35#36SHAREHOLDING PATTERN (As at March 31, 2022) 69% 2% 8% 11% HDFC WITH YOU, RIGHT THROUGH 10% ■Foreign Shareholders - 69% Individuals 10% ■Mutual Funds - 11% Financial Institutions, Banks & Insurance Companies - 8% Companies - 2% 36#37FINANCIALS STANDALONE (BASED ON INDIAN ACCOUNTING STANDARDS) HDFC WITH YOU, RIGHT THROUGH#38BALANCE SHEET (Standalone) Mar-22 Mar-21 Growth (Rs. in billion) (Rs. in billion) (%) Sources of Funds Shareholders' Funds 1,202.51 1,087.83 Borrowings 4,996.81 4,413.65 13% Current Liabilities & Provisions 209.30 174.51 6,408.62 5,675.99 13% Application of Funds Loans (before provisions) ^ 5,683.63 4,982.98 14% Investments Current/Fixed Assets 685.93 39.06 6,408.62 686.37 6.64 5,675.99 13% HDFC WITH YOU, RIGHT THROUGH ^Net of loans sold during the preceding 12 months amounting to Rs. 284.55 billion of individual loans and Rs 15.00 billion of standard, non individual loans. If these loans were included, the growth in loans would have been 20%. 38#39STATEMENT OF PROFIT AND LOSS – FY22 (Standalone) Li HDFC WITH YOU, RIGHT THROUGH Net Interest Income Add: Income on derecognised (assigned) loans Add: Other Operating Income Net Operating Income FY22 FY21 (Rs. in billion) (Rs. in billion) 171.19 Growth (%) 149.70 14.4% 10.56 11.90 3.30 2.87 185.05 164.47 12.5% Less: Non Interest Expenses 14.92 12.70 Less: Amortisation of ESOS and CSR Expenses 5.81 5.28 Add: Other Income 0.33 0.26 Profit Before Sale of Investments, Dividend, Fair Value 164.66 146.75 12.2% Changes and ECL Add: Net gain/(loss) on Fair Value Changes 9.38 9.56 Add: Dividend 15.11 7.34 Add: Profit on Sale of Investments 2.63 13.98 Less: Expected Credit Loss (ECL) Profit Before Tax Provision for Tax Profit After Tax Effective tax rate (%) 19.32 29.48 172.46 148.15 16.4% 35.04 27.88 137.42 120.27 14.3% 20.3% 18.8% 39#40STATEMENT OF PROFIT AND LOSS – Q4FY22 (Standalone) Li HDFC WITH YOU, RIGHT THROUGH Jan - Mar 22 Jan - Mar 21 (Rs. in billion) (Rs. in billion) Growth (%) Net Interest Income Add: Income on derecognised (assigned) loans Add: Other Operating Income Net Operating Income 46.01 40.27 14.3% 4.36 4.38 0.97 0.90 51.34 45.55 12.7% Less: Non Interest Expenses 4.05 3.07 Less: Amortisation of ESOS and CSR Expenses 1.09 1.92 Add: Other Income 0.08 0.10 Profit Before Sale of Investments, Dividend, Fair 46.28 40.66 13.8% Value Changes and ECL Add: Net gain/(loss) on Fair Value Changes 2.67 4.66 Add: Dividend 1.28 1.11 Less: Expected Credit Loss (ECL) 4.01 7.19 Profit Before Tax Provision for Tax Profit After Tax Effective tax rate (%) 46.22 39.24 17.8% 9.22 7.44 37.00 31.80 16.4% 19.9% 19.0% 40 40#41KEY ASSOCIATES AND SUBSIDIARIES HDFC WITH YOU, RIGHT THROUGH#42HDFC BANK LIMITED • 21% owned by HDFC • ADRs listed on NYSE . 6,342 banking outlets, 18,130 ATMs • • HDFC WITH YOU, RIGHT THROUGH Key business areas- Wholesale banking | Retail banking | Treasury operations Financials (as per Indian GAAP) for the year ended March 31, 2022 Advances as at March 31, 2022, stood at Rs. 13,688 bn an increase of 21% over the previous year Total deposits stood at Rs. 15,592 bn - - an increase of 17% over the previous year PAT (Indian GAAP): Rs. 369.61 bn - an increase of 19% over the previous year Arrangement between HDFC & HDFC Bank HDFC Bank sources home loans for a fee Loans originated in the books of HDFC HDFC offers a part of the disbursed loans for assignment to HDFC Bank (up to 70% of loans sourced by HDFC Bank) HDFC retains a spread on the loans that have been assigned Market Capitalisation (March 31, 2022): ~US$ 107 bn • 42 42#43HDFC WITH YOU, RIGHT THROUGH HDFC LIFE INSURANCE COMPANY LIMITED (HDFC LIFE) • 47.81% owned by HDFC • • With effect from January 2022, Exide Life Insurance Company (Exide Life) has become a wholly owned subsidiary of HDFC Life Total premium income for the year ended March 31, 2022 stood at Rs. 459.6 bn - growth of 19% over the previous year HDFC Life recorded a growth of 16% in terms of individual weighted received premium (WRP) during FY22 with a market share of 14.8% in the private sector. During the year ended March 31, 2022, the new business premium grew 20%. New Business Margin for the year ended March 31, 2022: 27.4% (PY: 26.1%) Indian Embedded Value stood at Rs. 300 bn as at March 31, 2022 (PY: Rs. 266 bn) Assets Under Management as at March 31, 2022 stood at Rs. 2 trillion, an increase of 17% over the PY Solvency Ratio as at March 31, 2022 – 176% (regulatory requirement: 150%) PAT for the year ended March 31, 2022 (Indian GAAP): Rs. 12.1 bn (PAT impacted due to elevated claims during the pandemic and reserving for excess mortality) Product mix - Unit Linked: 26%, Non-Par Savings: 33%, Annuity: 5%, Non-Par Protection: 6%, Par: 30% . Market capitalisation (March 31, 2022): ~US$ 15 bn 43#44HDFC WITH YOU, RIGHT THROUGH • HDFC ASSET MANAGEMENT COMPANY LIMITED 52.60% owned by HDFC and Abrdn Investment Management holds 16.21% of the equity of HDFC Asset Management • Quarterly Average Assets under Management as at March 31, 2022, stood at Rs. 4.3 trillion (US$ 57 bn), with an overall market share of 11.3% · Amongst India's largest actively managed equity mutual fund, with a market share of 11.5% as on March 31, 2022 Equity-oriented assets of HDFC MF as a proportion of total AUM was 51% Individual accounts of HDFC MF as at March 31, 2022 9.9 million live accounts 62% of total monthly average AUM is contributed by individuals Market share of 12.5% of individual monthly average AUM PAT for the year ended March 31, 2022 (as per Ind AS): Rs. 13.9 bn Market capitalisation (March 31, 2022): ~US$ 6 bn 44#45Li HDFC WITH YOU, RIGHT THROUGH • HDFC ERGO GENERAL INSURANCE COMPANY LTD. HDFC holds 49.98% and ERGO International AG holds 48.99% of the equity of HDFC ERGO General Insurance Company Limited (HDFC ERGO) Gross direct premium for the year ended March 31, 2022 stood at Rs. 135 bn (PY: Rs. 123 bn) Products: Motor, health, travel, home and personal accident in the retail segment; property, marine, aviation and liability insurance in the corporate segment; and crop insurance in rural segment Retail accounts for 61% of the total business Market share of 10.3% (private sector) and 6.1% (overall) in terms of gross direct premium for the year ended March 31, 2022 (Source: Gl Council) • As at March 31, 2022: Solvency Ratio - 164% (as against regulatory requirement of 150%) Profit after tax for the year ended March 31, 2022: Rs. 5 bn (impacted due to higher Covid-19 losses) 45 45#46HDFC WITH YOU, RIGHT THROUGH HDFC CAPITAL ADVISORS LIMITED HDFC Capital Affordable Real Estate Fund (HCARE) Set up as a SEBI registered AIF in 2016 Objective: To provide long-term flexible funding across the lifecycle of affordable and mid-income housing projects, including early-stage funding. The HCARE platform will also invest in technology companies engaged in the affordable housing ecosystem. HCARE 1 & 2 is a US$ 1.1 bn platform targeting affordable & mid-income residential projects In January 2022, HCARE achieved the initial closure of HCARE 3. Investors have committed US$ 1.22 bn to HCARE 3, focused on affordable and mid-income residential projects. Combined with potential re-investments, the total fund corpus will increase to an estimated US$ 1.88 bn. HCARE 3 combined with HCARE 1 & 2 will create a US$ 3 bn funding platform, focused on the development of affordable housing Primary investors in HCARE 1, 2 & 3 is a wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA), along with the National Investment and Infrastructure Fund (NIIF) in HCARE 2 HDFC Capital Advisors is the investment manager for the funds and is one of the largest real estate fund managers in the country In April 2022, HDFC entered into an agreement to sell 10% of the fully diluted paid-up share capital of HDFC Capital Advisors to a wholly-owned subsidiary of ADIA for Rs 1.84 bn 46 46#47HDFC CREDILA . HDFC holds 100% in HDFC Credila • • · HDFC WITH YOU, RIGHT THROUGH HDFC Credila is a non-banking finance company and was the first Indian lender to exclusively focus on education loans The company lends to under-graduate and post-graduate students studying in India or abroad As at March 31, 2022 Profit After Tax (as per Ind AS): Rs. 2.06 bn - 33% growth Cumulative loans disbursed: Rs. 164 bn Loan book outstanding: Rs. 88 bn 34% of the loan book is collateralised Gross non-performing assets: 0.22% 47 47#48FINANCIALS CONSOLIDATED (BASED ON INDIAN ACCOUNTING STANDARDS) HDFC WITH YOU, RIGHT THROUGH#49BALANCE SHEET (Consolidated) HDFC WITH YOU, RIGHT THROUGH Mar-22 Mar-21 Growth (Rs. in billion) (Rs. in billion) (%) Sources of Funds Shareholders' Funds 1,926.30 1,656.17 16% Liabilities Pertaining to Insurance Business 2,393.14 1,952.42 Loan Funds 5,074.60 4,470.11 Current Liabilities & Provisions 269.45 214.85 9,663.49 8,293.55 17% Application of Funds Loans 5,639.20 4,909.48 15% Assets pertaining to Insurance Business 2,532.07 2,071.39 Investments 1,194.57 1,107.94 Current Assets, Advances & Fixed Assets 244.76 188.73 Goodwill on Consolidation 52.89 16.01 9,663.49 8,293.55 17% 49 49#50HDFC WITH YOU, RIGHT THROUGH STATEMENT OF PROFIT AND LOSS -FY22 (Consolidated) FY22 Rs. in billion FY21 Growth Interest & Other Operating Income 480.86 473.36 Income from Insurance Business 852.19 886.25 Profit on Sale of Investment & Investment Properties 0.71 (0.02) Net gain on fair value changes 15.65 19.72 Income on derecognised (assigned) loans 9.85 11.03 Other Income 0.42 0.37 Total Income Finance costs 1,359.68 1,390.71 272.30 290.81 Expenses from Insurance Business 837.22 865.84 Non-Interest Expenses 36.91 30.59 Impairment on financial instruments 20.43 30.31 Total Expenses 1,166.86 1,217.55 Share of profit of associates (equity method) 89.70 69.21 Profit Before Tax 282.52 242.37 17% Total tax expense 42.10 37.49 Net Profit After Tax 240.42 204.88 17% Profit Attributable to the Corporation 225.95 187.40 21% 50#51- CONSOLIDATED PROFIT AFTER TAX – FY22 (As per Ind-AS) HDFC Profit After Tax HDFC Life HDFC Ergo HDFC Bank HDFC AMC HDFC Credila Other Companies Adjustments: HDFC WITH YOU, RIGHT THROUGH FY22 (Rs. in billion) FY21 Growth 137.42 (Rs. in billion) 120.27 14% 5.74 8.45 2.59 3.36 85.17 66.51 7.33 6.98 2.06 1.55 2.64 0.01 Dilution gain/loss from Associates Profit on Sale of Investments Dividend & Other Adjustments 4.53 2.81 (1.42) (13.76) (20.11) (8.78) Net Profit Attributable to the Corporation 225.95 187.40 21% 51 54#52ESG HDFC WITH YOU, RIGHT THROUGH III ESG & OTHER INITIATIVES#53THE ESG WAY: ENCOMPASSING ALL STAKEHOLDERS ENVIRONMENTAL HDFC WITH YOU, RIGHT THROUGH • • • ESG Ratings: HDFC's environmental impact is minimal/low risk Long-term commitment to finance affordable & green housing Focus on responsible lending ~ 2/3rd of the lease rental discounting portfolio is certified as green by Indian Green Building Council or the Leadership in Energy and Environmental Design Supporting programmes for environmental sustainability, recycling, conservation, animal & wildlife protection and the ecology Employee sensitisation on environmental impact; initiatives to facilitate carbon offsets • Recycling efforts at HDFC - paper, plastic, wet waste, e-waste • Launched green deposits for retail depositors in Aug 21 Recognised amongst India's Top Sustainable Companies by Business World Magazine in association with Sustain Labs, Paris in FY22 Contd... 53#54HDFC WITH YOU, RIGHT THROUGH THE ESG WAY: ENCOMPASSING ALL STAKEHOLDERS SOCIAL Shelter Assistance Reserve created in 1987: Set aside a portion of profits each year to support socially high impact projects Cumulatively financed 9.3 million housing units Focus on inclusion & diversity; employee engagement, training and wellbeing Institution with the largest number of beneficiaries under the Government's Credit Linked Subsidy Scheme at 0.31 mn HDFC primarily implements its CSR initiatives through the HT Parekh Foundation, a charitable institution set up by HDFC CSR focus areas: COVID-19 relief, healthcare, education, skilling & livelihoods, environmental sustainability Contd... 54 54#55THE ESG WAY: ENCOMPASSING ALL STAKEHOLDERS HDFC WITH YOU, RIGHT THROUGH III GOVERNANCE Founding principles of kindness, fairness, efficiency & effectiveness Recent Awards Felicitated under the 'Leadership' category in the Corporate Governance Score Card, 2021 under a joint initiative by IFC-liAS-BSE Best Integrated Report 2020 by Asian Centre for Corporate Governance & Sustainability 'Leadership in Employee Development' by ESGRisk.ai, India's 1st ESG rating company 'Company of the Year' at The Economic Times Awards for Corporate Excellence 2020 Golden Peacock Award for Excellence in Corporate Governance 2020 No promoter holding Well reputed, independent directors since inception; core competencies directly linked to the strategy of HDFC 55#56ESG REPORTS Report of Directors on Corporate Governance Annual Report on Corporate Social Responsibility (CSR) Activities • Business Responsibility Report HDFC WITH YOU, RIGHT THROUGH • • • Business Responsibility and Sustainability Report - prescribed by SEBI in May 21, voluntary for the top 1,000 companies by market cap for FY22, and mandatory from FY23 onwards. HDFC voluntarily adopted this format in FY21 and FY22 Integrated Report HDFC COVID-19 Relief Response: Impact Assessment Report Social Initiatives Report • Independent Review of HDFC's Sustainability Initiatives. Reports are available on the website: https://www.hdfc.com/investor-relations#environmental-social-and-governance 56 99#57Li HDFC WITH YOU, RIGHT THROUGH DASH PHILOSOPHY & DIGITALISATION OBJECTIVES Re-imagine and transform the customer journey across the lifecycle to improve customer experience and create market differentiation -D חוווי C ......... D Digital First Personalised and digital borrower experience A Agile Methods Customer centric designs, teams collaborate with IT & User Support Groups Seamless S Automate document ingestion; leverage cloud architecture and APIs to facilitate scalability H___ HDFC For You Organisation-wide thrust on identification and tracking of outcomes and input metrics to drive impact 57 57#58HDFC WITH YOU, RIGHT THROUGH • DASH PHILOSOPHY & DIGITALISATION INITIATIVES Board level Information Technology Committee - comprising two independent directors, a whole-time director and members of senior management • Information Security and Steering Committee monitors the progress of information security and cyber security • Emphasis on regulation and compliance with respect to consent management, data protection & privacy 58#59May 13, 2022 HDFC WITH YOU, RIGHT THROUGH 59