#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... Incorporated in 1977 as the first specialised mortgage company in India A financial conglomerate with interests beyond mortgages 68% shares held by foreign investors GHDFC Market capitalisation*: US$ 58 bn HDFC WITH YOU, RIGHT THROUGH Life 20.9% 48.7% 52.6% HDFC HDFC BANK Market capitalisation*: US$ 110 bn ADRs listed on NYSE Market capitalisation*: US$ 15 bn Ranks amongst the top 3 life insurers HDFC MUTUAL FUND Market capitalisation*: US$ 6 bn Ranks amongst the top 3 AMCs with total AUM of US$ 54 bn 49.9% HDFC ERGO Ranks amongst the top 3 private players in general insurance *As at December 31, 2022 US$ amounts converted based on exchange rate of US$ 1 = Rs. 82.68 100% 100% <> HDFC SALES Financial services distribution company Sources 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$ 1.7 bn 88.2% GHDFC CAPITAL Property funds: of which US$ 3 bn is committed for development of affordable housing 3#4MATERIAL DEVELOPMENTS HDFC WITH YOU, RIGHT THROUGH#5GHDFC 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 Subsidiaries/associates of HDFC Limited will become subsidiaries/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 • Till date, the stock exchanges (NSE & BSE), Pension Fund Regulatory and Development Authority, SEBI and RBI have accorded "no objection" for the above scheme • The scheme was approved by shareholders of the Corporation at the shareholders' meeting convened by National Company Law Tribunal on November 25, 2022 • The merger proposal is subject to various statutory and regulatory approvals 5#6HDFC WITH YOU, RIGHT THROUGH RATIONALE Proposed Transformational Combination of HDFC with HDFC Bank • 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 22.5% • 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 6#7HDFC WITH YOU, RIGHT THROUGH • BENEFITS OF A COMBINED ENTITY Proposed Transformational Combination of HDFC with HDFC Bank Synergies 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 71 million customers of HDFC Bank, only 5% have a mortgage from other mortgage providers 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 December 31, 2022) • Individual Loans Originated CAGR (5 years) • Cumulative Housing Units Financed HDFC WITH YOU, RIGHT THROUGH Rs. 7,014.85 bn US$ 84.84 bn : 16% : 10 million Cost to Income Ratio (excluding notional cost of Employee Stock Option Scheme & Corporate Social Responsibility Expenses) Unaccounted gains on listed investments : 9.5% Rs. 2,558.83 bn • in subsidiary and associate companies (As at December 31, 2022) • : US$ 30.95 bn Consolidated Profit After Tax CAGR (5 years) : 15% 9#10• BUSINESS HIGHLIGHTS – Q3FY23 Inherent demand for home loans continues HDFC WITH YOU, RIGHT THROUGH • Loan book and Assets Under Management cross Rs. 6 trillion and Rs. 7 trillion respectively • 26% growth in individual loans (after adding back loans sold in the preceding 12 months) · • • Approvals and disbursements grew by 21% and 23% respectively during the nine months ended December 31, 2022 Significant improvement in asset quality • · • Collection efficiency for individual loans on a cumulative basis over the last 9 months stood at 99% Reduction in aggregate of Stage 2 and Stage 3 assets to 5.5% of the Exposure at Default as at December 31, 2022 compared to the peak of 9.2% as at June 30, 2021 Lower annualised credit costs in Q3 FY23 at 0.22% (down from 0.33% and 0.29% in Q1 and Q2 respectively) Outstanding loans restructured under RBI's Resolution Framework OTR 1.0 and 2.0 at 0.7% of the loan book (down from the peak of 1.4% in Sep-21) 10 10#11T HDFC WITH YOU, RIGHT THROUGH D MORTGAGE Click here for more information NEXT MORTGAGE MARKET IN INDIA NO D 9 ND " " 4 9 4 4 4 9 L 1239 6 2 7 2 W O L P 41 4 24 E e 9 K L L 2 9 5 27 1 2 whiff option#12DRIVERS OF MORTGAGE GROWTH . Improved Affordability • Low Penetration • Government Incentives ■ Enhanced Fiscal Benefits ■ Incentives for Affordable Housing Other Demand Drivers HDFC WITH YOU, RIGHT THROUGH 12#13Property Value (Rs. 100,000) & Affordability 60 50 40 40 IMPROVED AFFORDABILITY Best affordability in 2.5 decades Government support towards housing has helped improve affordability 30 21.7 20 20 10 Lī HDFC WITH YOU, RIGHT THROUGH 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 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 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Affordability Annual Income Affordability equals property prices by annual income 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Annual Income (Rs. 100,000) 13#1480% 60% 40% 20% 0% India LOW PENETRATION IMPLIES ROOM FOR GROWTH MORTGAGES AS A PERCENT OF NOMINAL GDP 100% 11% China 89% 83% 68% 52% 56% 45% 44% 39% 34% 18% 20% Thailand Malaysia Japan Singapore Germany USA Source: European Mortgage Federation, Hofinet & HDFC estimates for India. Note: India's lower GDP resulted in an increase in the mortgage to GDP ratio. Australia UK Denmark Netherlands 14 HDFC WITH YOU, RIGHT THROUGH#15GOVERNMENT/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 and urban infrastructure development 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 15#16TAX INCENTIVES HAVE LOWERED THE EFFECTIVE RATES ON MORTGAGES HDFC WITH YOU, RIGHT THROUGH FY 2023 FY 2002 FY 2000 Loan amount 3,570,000 3,570,000 3,570,000 Nominal Interest Rate (%) 8.65% 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 34.32% 31.50% 34.50% Tenor (years) 20 20 20 Total amount paid per year 458,805 434,928 509,556 Interest component 308,805 383,775 473,025 Principal repaid 150,000 51,153 36,531 Tax amount saved 120,120 53,550 32,775 Effective interest paid on home loan 188,685 330,225 440,250 Effective interest on home loan 5.3% 9.3% 12.3% 16#17HDFC 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 Affordability: Improved affordability through rising disposable incomes 17#18268'LL OPERATIONAL & FINANCIAL HIGHLIGHTS: MORTGAGES KAYANT OZOz 682'09 BISA slaytona HDFC WITH YOU, RIGHT THROUGH 2375#19CORE BUSINESS - LENDING (As at December 31, 2022: Gross Loans - US$ 84.84 bn) INDIVIDUAL LOANS ⚫ Home Loans- • Fixed rate loans Floating rate loans Home Improvement Loans • Home Extension Loans • Home Equity Loans Individuals 82% HDFC WITH YOU, RIGHT THROUGH Corporate 4% Construction Finance 8% Lease Rental Discounting 6% • Rural Home Loans • Loans to NRIs Individuals Corporate Construction Finance Lease Rental Discounting Loan Book Outstanding As at December 31, 2022 (After Sell Down) Loan Book o/s Before Sell Down in last 12 months Assets Under Management Rs. bn US$ bn % Growth Rs. bn Individuals Non-Individuals Total 4,794 58 17% 5,153 62 1,230 15 -6% 1,230 15 US$ bn % Growth 26% -6% Rs. bn US$ bn % Growth 5,770 70 18% 1,245 15 -5% 6,024 73 12% 6,383 77 18% 7,015 85 13% Individual loans sold (outstanding): Rs. 977 bn (US$ 11.82 bn) 1999#20HOUSING ACROSS INCOME GROUPS Housing Loan Approvals Based on Income Slabs: Apr-Dec 22 In Value terms HIG 52% MIG 38% In Number terms LIG/EWS 10% MIG 48% HIG 29% HDFC WITH YOU, RIGHT THROUGH LIG / EWS 23% 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 • . 23% of home loan approvals in volume terms and 10% in value terms has been to the EWS & LIG segments Average home loan - EWS: Rs. 1.08 mn, LIG: Rs. 1.95 mn 20#21INDIVIDUAL LOANS: Apr-Dec 22* Employment Employed 78% Self- Employed (incl: professionals) 22% ■Employed Self-Employed (incl: professionals) *Based on value of approvals Self- Acquisition Mode construction 9% Resale 37% First Purchase 54% HDFC WITH YOU, RIGHT THROUGH Geographic Spread West 33% East 4% Resale ■Self-construction First Purchase East North 28% South 35% West North South 21 21#22SCALE & SPEED THROUGH DIGITALISATION . Growing trend of digital on-boarding of customers Li 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 94% of new loan customers 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 22 22#2383% OF OUR MORTGAGES ARE SOURCED BY OURSELVES OR THROUGH OUR AFFILIATES HDFC WITH YOU, RIGHT THROUGH December 31, 2022 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 Other Direct Selling Direct Walk-ins 2% Agents 17% Deposit & loan products offered at several locations through outreach programmes. Total number of offices: 724 which is inclusive of 213 outlets of HDFC Sales Limited HDFC Sales Private Limited 51% HDFC Bank 30% 23#24HDFC WITH YOU, RIGHT THROUGH · . • • 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. 3.57 mn (~US$ 43,200) : 70% (at origination) : 12 years : 38 years : Mortgage of property financed : Amortising 24 24#25Percentage HDFC WITH YOU, RIGHT THROUGH GROSS NON-PERFORMING LOANS(NPLs) & PROVISIONS CARRIED As per RBI's Revised Norms (i.e. November 12, 2021) 2.45% 2.32% 2.38% 2.50% 1.91% 2.00% 1.50% 1.00% 0.50% 0.00% Dec-21 GROSS NPLs Mar-22 1.49% Dec-22 2.21% As at December 31, 2022 (Rs. in bn) NPLs (90 days): 88.80 Provisions Carried: 132.74 ■PROVISIONS CARRIED AS % OF EAD* As at Dec 31, NPLs 2021 2022 As at Mar 31, As at Dec 31, 2022 Individual Loans 1.44% 0.99% 0.86% Non-Individual Loans 5.04% 4.76% 3.89% Overall NPLs 2.32% 1.91% 1.49% *EAD: Exposure at Default 25#26EXPECTED CREDIT LOSS (ECL) BASED ON EXPOSURE AT DEFAULT (EAD) Exposure at Default Dec-22 Mar-22 Dec-21 Stage 1 94.5% 93.3% 92.2% Stage 2 3.7% 4.4% 5.1% Stage 3 1.8% 2.3% 2.7% Coverage Ratio (ECL/EAD) Stage 1 0.27% 0.26% 0.27% Stage 2 24.98% 20.35% 17.05% Stage 3 55.96% 54.33% 48.93% ECL/EAD 2.21% 2.38% 2.45% HDFC WITH YOU, RIGHT THROUGH 26#27Percentage MULTIPLE SOURCES OF BORROWINGS (As at December 31, 2022: Total Borrowings - US$ 65.76 bn) HDFC WITH YOU, RIGHT THROUGH 100% 3% 3% 5% 80% 43% 41% 43% External Commercial Borrowings ■Debentures & Securities 60% Term Loans 20% 24% 40% 22% Deposits 20% 34% 32% 30% 0% Dec-20 Dec-21 Dec-22 Total Borrowings: Rs. 5,436.64 bn (US$ 65.76 bn) 27 22#28LOAN SPREADS HDFC WITH YOU, RIGHT THROUGH 12.00% 10.18% 10.00% 8.99% 2.29% 8.06% 8.00% 2.27% 6.00% 4.00% 6.70% 7.91% 5.77% 2.00% 0.00% FY20 FY21 Return on Loans 2.40% 2.35% 8.80% 2.30% 2.29% 2.29% 2.25% 2.20% 6.51% 2.15% 2.10% FY22 Apr-Dec 22 Cost of Borrowings >>Spread Apr-Dec 22 Spread earned on: Individual Loans 1.91% Non-individual Loans 3.69% Loan Book 2.29% 28#29MATURITY PROFILE (As at March 31, 2022) Rs. in billion 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 29 29#30PRODUCTIVITY RATIOS HDFC WITH YOU, RIGHT THROUGH Number of employees Number of outlets Dec-22 Mar-22 Mar-21 3,925 3,599 3,226 511 464 390 Profit per employee (US$ '000) 484 501 491 Assets per employee (US$ mn) 20.7 22.7 22.5 Admin costs/assets (%)^ 0.30 0.23 0.21 Cost income ratio (%)^ 9.5 8.1 7.7 Dec-22: annualised ^Excluding notional cost of ESOS and CSR expenses 30#31KEY FINANCIAL METRICS HDFC WITH YOU, RIGHT THROUGH Dec-22 Mar-22 Mar-21 Net Interest Margin (%) 3.5 3.5 3.5 Pre-Tax RoAA (%) 3.0 2.9 2.8 Post Tax RoAA (%) 2.4 2.3 2.3 Return on Tier 1 Capital (%) 15.4 15.0 14.8 Capital Adequacy (%) 23.7 22.8 22.2 Of which Tier 1 (%) 23.2 22.2 21.5 Tier II (%) 0.5 0.6 0.7 Dec-22: annualised 31#32200 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#33VALUATION – METHOD 1 • Number of shares outstanding: 1.83 billion • Share Price (CMP as at December 31, 2022): Rs. 2,638 • Market Capitalisation: Rs. 4,819 billion (~US$ 58.3 bn) HDFC WITH YOU, RIGHT THROUGH Particulars Rs. bn US$ bn Net Worth 1,292 15.6 Add: Unaccounted gains on strategic 2,559 30.9 listed investments Add: Unaccounted gains on unlisted 261 3.2 investments Adjusted Networth 4,112 49.7 Market Capitalisation 4,819 58.3 Adjusted Price to Book Ratio 1.2 1.2 33#34• VALUATION – METHOD 2 - Number of shares outstanding: 1.83 billion Share Price (CMP as at December 31, 2022): Rs. 2,638 • Market Capitalisation: Rs. 4,819 billion (~US$ 58.3 bn) Particulars Rs. bn US$ bn Market Capitalisation 4,819 58.3 Less: Unaccounted gains on strategic 2,559 30.9 listed investments Less: Unaccounted gains on unlisted 261 3.2 investments Adjusted Market Capitalisation 1,999 24.2 Net Worth 1,292 15.6 Adjusted Price to Book Ratio 1.5 1.5 HDFC WITH YOU, RIGHT THROUGH 34#35SHAREHOLDING PATTERN (As at December 31, 2022) 68% 2% 8% 12% HDFC WITH YOU, RIGHT THROUGH 10% Foreign Shareholders - 68% I Individuals 10% I Mutual Funds - 12% Financial Institutions, Banks & Insurance Companies - 8% Companies - 2% 35#36FINANCIALS STANDALONE (BASED ON INDIAN ACCOUNTING STANDARDS) HDFC WITH YOU, RIGHT THROUGH#37BALANCE SHEET (Standalone) Dec-22 Dec-21 Growth (Rs. in billion) | (Rs. in billion) (%) Sources of Funds Shareholders' Funds 1,292.39 1,154.00 Borrowings 5,436.64 4,875.46 12% Current Liabilities & Provisions 246.44 204.74 6,975.47 6,234.20 12% Application of Funds Loans (before provisions) ^ 6,023.55 5,389.94 12% Investments Current/ Fixed Assets 872.83 79.09 6,975.47 817.64 26.62 6,234.20 12% HDFC WITH YOU, RIGHT THROUGH ^Net of loans sold during the preceding 12 months amounting to Rs. 359.37 billion of individual loans. If these loans were included, the growth in loans would have been 18%. 37#38FINANCIALS - Apr-Dec 22 • Apr-Dec 22 entailed a volatile environment HDFC WITH YOU, RIGHT THROUGH • • The monetary policy and interest rate actions have had a short-term impact on the net interest income • This has been due to the transmission lag between the interest rate increase in borrowing costs and the increase in lending rates On account of volatile equity markets, the net gain on investments fair valued through the profit and loss account stood at Rs 0.89 bn (PY: Rs 6.72 bn) • Dividend income was higher at Rs 25.28 bn (PY: Rs 13.83 bn) • Profit on Sale of Investments: Rs 1.84 bn (PY: Rs 2.63 bn) • Non-interest expense ratios were higher due to an increase in upfront expenses on staffing, branch expansion and information technology -- benefits to accrue over the coming periods. 38#39STATEMENT OF PROFIT AND LOSS - Apr-Dec 22 (Standalone) Net Interest Income Add: Income on derecognised (assigned) loans Add: Other Operating Income Net Operating Income Apr-Dec 22 (Rs. in billion) 139.26 6.72 Apr-Dec 21 (Rs. in billion) Growth (%) 125.19 11% 6.20 2.88 2.32 148.86 133.71 11% Less: Non Interest Expenses 14.12 10.87 Less: Amortisation of ESOS and CSR Expenses 3.36 4.72 Add: Other Income 0.34 0.25 Profit Before Sale of Investments, Dividend, Fair 131.72 118.37 11% Value Changes and ECL Add: Net gain/(loss) on Fair Value Changes 0.89 6.72 Add: Dividend 25.28 13.83 Add: Profit on Sale of Investments Less: Expected Credit Loss (ECL) Profit Before Tax Provision for Tax Profit After Tax Effective tax rate (%) 1.84 2.63 13.57 15.31 146.16 126.24 16% 28.02 25.82 118.14 100.42 18% 19.2% 20.5% Li HDFC WITH YOU, RIGHT THROUGH 39#40STATEMENT OF PROFIT AND LOSS – Q3FY23 (Standalone) HDFC WITH YOU, RIGHT THROUGH Oct-Dec 22 Oct-Dec 22 Growth (Rs. in billion) (Rs. in billion) (%) Net Interest Income Add: Income on derecognised (assigned) loans Add: Other Operating Income Net Operating Income 48.40 42.84 13% 1.58 2.24 1.18 0.83 51.16 45.91 11% Less: Non Interest Expenses 4.87 3.69 Less: Amortisation of ESOS and CSR Expenses 0.84 1.08 Add: Other Income 0.17 0.09 Profit Before Sale of Investments, Dividend, Fair 45.62 41.23 11% Value Changes and ECL Add: Net gain/(loss) on Fair Value Changes (0.62) 1.23 Add: Dividend 4.82 1.95 Add: Profit on Sale of Investments Less: Expected Credit Loss (ECL) Profit Before Tax Provision for Tax Profit After Tax Effective tax rate (%) 3.70 3.93 46.12 40.48 14% 9.21 7.87 36.91 32.61 13% 20.0% 19.4% 40 40#41KEY ASSOCIATES AND SUBSIDIARIES HDFC WITH YOU, RIGHT THROUGH#42HDFC BANK LIMITED • 20.9% owned by HDFC • ADRs listed on NYSE . 7,183 banking outlets, 19,007 ATMs • • HDFC WITH YOU, RIGHT THROUGH Key business areas- Wholesale banking | Retail banking | Treasury operations Financials (as per Indian GAAP) for the nine-months ended December 31, 2022 Advances as at December 31, 2022, stood at Rs. 15 trillion year - an increase of 20% over the previous Total deposits stood at Rs. 17 trillion - an increase of 20% over the previous year PAT (Indian GAAP): Rs. 320.61 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 (December 31, 2022): ~US$ 110 bn 42 42#43• • HDFC WITH YOU, RIGHT THROUGH HDFC LIFE INSURANCE COMPANY LIMITED (HDFC LIFE) 48.7% owned by HDFC Successfully completed the merger with Exide Life in October 2022. The entire transaction was completed in less than 14 months. Total premium income for the nine months ended December 31, 2022 stood at Rs. 379.1 bn - growth of 20% over the previous year . Market share of 15.8% among the private insurers • • Key highlights during the nine months ended December 31, 2022 (post-merger)#: New Business Margin: 26.5% (PY: 26.5%). Indian Embedded Value stood at Rs. 377 bn as at December 31, 2022 (PY: Rs. 295 bn) Assets Under Management as at December 31, 2022 stood at Rs. 2.3 trillion (PY: Rs 1.9 trillion) Solvency Ratio as at December 31, 2022 - 209% (regulatory requirement: 150%) PAT for nine months ended December 31, 2022 (Indian GAAP): Rs. 10 bn (PY: Rs. 8.5 bn) Product mix (Individual APE) - Unit Linked: 21%, Non-Par Savings: 39%, Annuity: 6%, Protection: 5%, Par: 29% HDFC International, (overseas subsidiary of HDFC Life) has been granted the certificate of registration to set up a branch at GIFT City • Market capitalisation (December 31, 2022): ~US$ 15 bn # Previous year numbers are not comparable due to the Exide Life merger in FY23 43 43#44HDFC WITH YOU, RIGHT THROUGH HDFC ASSET MANAGEMENT COMPANY LIMITED (HDFC AMC) • 52.6% owned by HDFC • . • Quarterly Average Assets under Management as at December 31, 2022, stood at Rs. 4.4. trillion (US$ 54 bn), with an overall market share of 11% Amongst India's largest actively managed equity mutual funds with a market share of 11.7% as at December 31, 2022 Equity-oriented AUM of HDFC MF as a proportion of total AUM was 55% Individual accounts of HDFC MF as at December 31, 2022 10.8 million live accounts 66% of total monthly average AUM is contributed by individuals Market share of 12.8% of individual monthly average AUM Wholly owned subsidiary, HDFC AMC International (IFSC) Limited is located GIFT City PAT for nine months ended December 31, 2022 (as per Ind AS): Rs. 10.48 bn • Market capitalisation (December 31, 2022): ~US$ 6 bn 44#45HDFC WITH YOU, RIGHT THROUGH HDFC ERGO GENERAL INSURANCE COMPANY LIMITED (HDFC ERGO) • • HDFC holds 49.98% and ERGO International AG holds 48.99% of the equity of HDFC ERGO Gross direct premium for nine months ended December 31, 2022 stood at Rs. 119.33 bn (PY: Rs. 95.47 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 10.5% (private sector) and 6.4% (overall) in terms of gross direct premium for the period ended December 31, 2022 (Source: Gl Council) As at December 31, 2022: Solvency Ratio - 174% (as against regulatory requirement of 150%) Profit after tax for nine months ended December 31, 2022: Rs. 4.47 bn (PY: Rs. 3.23 bn) 45 45#46HDFC WITH YOU, RIGHT THROUGH · HDFC CAPITAL ADVISORS LIMITED (HCAL) HDFC owns 88.2% and Abu Dhabi Investment Authority (ADIA) holds 10% of the equity in HCAL 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 also invests in technology companies engaged in the affordable housing ecosystem. ⚫ Amongst the largest private finance platforms for affordable housing • • • Targets affordable & mid-income residential projects with a total funding platform of US$ 3.1 billion Primary investors in HCARE 1, 2 & 3 is a wholly owned subsidiary of ADIA, along with the National Investment and Infrastructure Fund (NIIF) in HCARE 2 HDFC Capital Advisors is the investment manager for the funds 46 46#47HDFC WITH YOU, RIGHT THROUGH HDFC CREDILA FINANCIAL SERVICES LIMITED (HDFC CREDILA) . HDFC holds 100% in HDFC Credila • • • 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 December 31, 2022 ■ Profit After Tax (as per Ind AS): Rs. 1.85 bn - 28% growth ■ Cumulative loans disbursed: Rs. 224 bn ■Loan book outstanding: Rs. 136 bn • 30% of the loan book is collateralised Gross non-performing assets: 0.14% (based on RBI's Nov 12, 2021 circular) 47 47#48FINANCIALS CONSOLIDATED (BASED ON INDIAN ACCOUNTING STANDARDS) HDFC WITH YOU, RIGHT THROUGH#49BALANCE SHEET (Consolidated) Sources of Funds HDFC WITH YOU, RIGHT THROUGH Dec-22 Dec-21 Growth (Rs. in billion) (Rs. in billion) (%) Shareholders' Funds 2,068.90 1,789.41 16% Liabilities Pertaining to Insurance Business 2,522.48 2,154.39 Loan Funds 5,558.22 4,948.55 Current Liabilities & Provisions 314.40 251.79 10,464.00 9,144.14 14% Application of Funds Loans 6,026.89 5,333.09 13% Assets pertaining to Insurance Business 2,686.32 2,291.90 Investments 1,420.55 1,301.90 Current Assets, Advances & Fixed Assets 277.35 201.24 Goodwill on Consolidation 52.89 16.01 10,464.00 9,144.14 14% 49 49#50STATEMENT OF PROFIT AND LOSS - Apr-Dec 22 (Consolidated) Apr-Dec 22 Rs. in billion Apr-Dec 21 Li HDFC WITH YOU, RIGHT THROUGH Interest & Other Operating Income Income from Insurance Business Profit on Sale of Investment & Investment Properties Net gain on fair value changes 433.46 356.05 640.02 633.28 0.03 0.67 3.15 12.81 Income on derecognised (assigned) loans Other Income 6.41 5.98 0.37 0.29 Total Income Finance costs 1,083.44 1,009.08 263.81 203.05 Expenses from Insurance Business 628.34 625.99 Non-Interest Expenses 31.49 26.95 Impairment on financial instruments 13.41 16.35 Total Expenses 937.05 872.35 Share of profit of associates (equity method) 81.87 65.22 Profit Before Tax 228.26 201.95 Total tax expense 31.31 30.45 Net Profit After Tax 196.95 171.50 Profit Attributable to the Corporation 185.37 161.36 50#51CONSOLIDATED PROFIT AFTER TAX - Apr-Dec 22 (As per Ind-AS) HDFC Profit After Tax HDFC Life HDFC Ergo HDFC Bank HDFC AMC HDFC Credila Other Companies Adjustments: Apr-Dec 22 (Rs. in billion) HDFC WITH YOU, RIGHT THROUGH Apr-Dec 21 (Rs. in billion) 118.14 100.42 4.33 3.76 1.85 1.72 77.31 61.46 5.51 5.52 1.85 1.44 5.27 2.29 Dilution gain/loss from Associates Profit on Sale of Investments Dividend & Other Adjustments 4.56 3.76 (1.42) (1.42) (32.03) (17.59) Net Profit Attributable to the Corporation 185.37 161.36 54 51#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 -- enhanced E&S due diligence MoU with Indian Green Building Council to help promote green buildings ~ 3/4th of the lease rental discounting portfolio is certified as green by accredited green rating agencies Funding lines from multilateral agencies for on-lending for affordable housing green and . Green and sustainable deposits for retail depositors • Supporting programmes for environmental sustainability, recycling, conservation, animal & wildlife protection and the ecology Employee sensitisation on climate change and environmental sustainability Measuring and monitoring the Corporation's carbon footprint, increased solar panel installations in owned office premises and other initiatives to reduce the carbon footprint - Disclosures CDP reporting, Introductory Framework on Climate-related Financial Disclosures 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 10 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 (CLSS) 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: healthcare, education, skilling & livelihoods, persons with disabilities, environmental sustainability National CSR Awards by the Ministry of Corporate Affairs, Government of India (Gol) for 'Overall Excellency in CSR for Large Companies' and 'CSR in National Priority Areas - Supporting Technology Incubators' Best performing Housing Finance Company for CLSS by the Ministry of Housing and Urban Affairs (Gol) At the 19th Inclusive Finance India Awards, the Corporation was awarded the 'Jury Special Award' for contribution to Financial Inclusion 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 • • Highest Governance score of 1 by ISS, 2022 'Leadership' category for ESG - CRISIL Sustainability Yearbook, 2022 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' 2021 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: 2018, 2020 and 2022 No promoter holding Well reputed, independent directors since inception; core competencies directly linked to the strategy of HDFC 55#56• • ESG REPORTS HDFC WITH YOU, RIGHT THROUGH Report of Directors on Corporate Governance Annual Report on Corporate Social Responsibility (CSR) Activities 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 Introductory Framework on Climate-related Financial Disclosures 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#57-D DASH PHILOSOPHY & DIGITALISATION OBJECTIVES Re-imagine and transform the customer journey across the lifecycle to improve customer experience and create market differentiation ......... O Li HDFC WITH YOU, RIGHT THROUGH Digital First D 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 57 555#58DASH PHILOSOPHY & DIGITALISATION INITIATIVES • • Board level Information Technology Committee - HDFC WITH YOU, RIGHT THROUGH 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#59February 2, 2023 HDFC WITH YOU, RIGHT THROUGH 59