#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... GHDFC Market capitalisation*: US$ 55 bn HDFC WITH YOU, RIGHT THROUGH Incorporated in 1977 as the first specialised mortgage company in India A financial conglomerate with interests beyond mortgages 68% shares held by foreign investors 20.97% 47.79% 52.59% HDFC HDFC BANK Market capitalisation*: US$ 101 bn ADRs listed on NYSE Life Market capitalisation*: US$ 15 bn Ranks 2nd in overall new business premium amongst private players HDFC MUTUAL FUND Market capitalisation*: US$ 5 bn Ranks amongst the top 3 AMCs with total AUM of US$ 53 bn 49.98% HDFC ERGO Ranks amongst the top 3 private players in general insurance 100% 100% 100% 88.24% *As at July 31, 2022 US$ amounts converted based on exchange rate of US$ 1 = Rs. 78.97 <> 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$ 1.2 bn GHDFC PROPERTY FUND GHDFC CAPITAL Property funds: of which US$ 3 bn is committed for development of affordable housing 3#4MATERIAL DEVELOPMENTS HDFC WITH YOU, RIGHT THROUGH#5HDFC 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 and RBI have accorded "no objection" for the above scheme • The merger proposal is subject to various statutory and regulatory approvals, including from the Competition Commission of India, National Company Law Tribunal, other applicable authorities and the respective shareholders and creditors 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 22.5% 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 June 30, 2022) HDFC WITH YOU, RIGHT THROUGH Rs. 6,713.64 bn : US$ 85.02 bn • Individual Loans Originated CAGR (5 years) : 16% • Cumulative Housing Units Financed Cost to Income Ratio (excluding notional cost of Employee Stock Option Scheme & Corporate Social Responsibility Expenses) : 9.5 million : 9.5% • Unaccounted gains on listed investments in subsidiary and associate companies (As at June 30, 2022) • : Rs. 2,172.23 bn : US$ 27.51 bn Consolidated Profit After Tax CAGR (5 years) : 15% 9#10- BUSINESS HIGHLIGHTS – Q1FY23 • Continued momentum in the demand for home loans HDFC WITH YOU, RIGHT THROUGH • . · • 92% of new loan applications were received through the digital mode Approvals and disbursements grew by 60% and 66% respectively in Q1FY23 over Q1FY22 Disbursements in Q1FY23 were the highest ever disbursements in the first quarter of any financial year • 28% growth in individual loans (after adding back loans sold in the preceding 12 months) Highest percentage growth in individual loans on an AUM basis in the past 8 years Significant improvement in asset quality The collection efficiency for individual loans on a cumulative basis stood at over 99% Reduction in aggregate of Stage 2 and Stage 3 assets to 6.5% of the Exposure at Default as at June 30, 2022 compared to 9.2% as at June 30, 2021 • Credit costs at 0.33% (PY: 0.50%) Outstanding loans restructured under RBI's Resolution Framework OTR 1.0 and 2.0 at 0.77% of the loan book (reduced from peak of 1.4% in Sep-21) 10 10#11HDFC 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#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 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) 13#14LOW 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 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 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 15#16TAX INCENTIVES HAVE LOWERED THE EFFECTIVE RATES ON MORTGAGES Loan amount HDFC WITH YOU, RIGHT THROUGH FY 2023 FY 2002 FY 2000 3,570,000 3,570,000 3,570,000 Nominal Interest Rate (%) 7.55% 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 419,535 434,928 509,556 Interest component 269,535 383,775 473,025 Principal repaid 150,000 51,153 36,531 Tax amount saved 120,120 53,550 32,775 Effective interest paid on home loan 149,415 330,225 440,250 Effective interest on home loan 4.2% 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 Interest Rates: Improved affordability through rising disposable incomes and relatively low interest rates on home loans 17#18HDFC WITH YOU, RIGHT THROUGH www Paytona AT Matistic 2124 13,678 $0.789 2020 2021 OPERATIONAL & FINANCIAL HIGHLIGHTS: MORTGAGES 11,892 Total Sates#19CORE BUSINESS - LENDING (As at June 30, 2022: Gross Loans - US$ 85.02 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 As at June 30, 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 4,474 57 19% 4,799 61 1,336 17 7% 1,351 17 US$ bn % Growth 28% 9% Rs. bn US$ bn % Growth 5,363 68 19% 1,351 17 8% 5,810 74 16% 6,150 78 23% 6,714 85 17% Individual loans sold (outstanding): Rs. 888.56 bn (US$ 11.25 bn) 19#20HOUSING ACROSS INCOME GROUPS Housing Loan Approvals Based on Income Slabs: Q1FY23 In Value terms HIG 50% C MIG 40% In Number terms LIG / EWS 10% MIG 49% 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. HIG 28% HDFC WITH YOU, RIGHT THROUGH LIG / EWS 23% 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. 1.11 mn, LIG: Rs. 1.97 mn 20#21INDIVIDUAL LOANS: Q1FY23* Employed 79% Employment Self- Employed (incl: professionals) 21% ■Employed Self-Employed (incl: professionals) *Based on value of approvals Acquisition Mode Self- construction 8% Resale 39% First Purchase 53% 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 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 92% 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 June 30, 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 Agents 17% Direct Walk-ins 3% Deposit & loan products offered at several locations through outreach programmes. Total number of offices: 695 which is inclusive of 214 outlets of HDFC Sales Limited HDFC Sales Private Limited 50% 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$ 45,200) : 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) 2.64% As at June 30, 2022 (Rs. in bn) 3.00% 2.24% 2.38% 2.28% 1.91% 1.78% 2.00% 1.00% 0.00% Jun-21 * ■GROSS NPLs Mar-22 Jun-22 ■PROVISIONS CARRIED AS % OF EAD** NPLs As at Jun 30, 2022 As at Mar 31, 2022 As at Jun 30, 2021* Individual Loans 0.98% 0.99% 1.37% Non-Individual Loans 4.44% 4.76% 4.87% Overall NPLs 1.78% 1.91% 2.24% NPLs (90 days): 102.88 Provisions Carried: 133.28 To facilitate a like-for-like comparison with the previous year: * As at June 30, 2022, based on the earlier norms, the NPAs are as follows: Individuals: 0.75% Total NPLs: 1.61% *Jun-21 NPLs are not comparable due to change in classification norms by the Reserve Bank of India in Nov-21. Jun-22 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 25#26EXPECTED CREDIT LOSS (ECL) BASED ON EXPOSURE AT DEFAULT (EAD) As per IndAS Exposure at Default Stage 1 Stage 2 Stage 3 Jun-22 Mar-22 Jun-21 93.5% 93.3% 90.8% 4.4% 4.4% 6.6% 2.1% 2.3% 2.6% Coverage Ratio (ECL/EAD) Stage 1 0.20% 0.26% 0.24% Stage 2 22.88% 20.35% 17.55% Stage 3 52.75% 54.33% 48.31% ECL/EAD 2.30% 2.38% 2.64% HDFC WITH YOU, RIGHT THROUGH 26#27Percentage MULTIPLE SOURCES OF BORROWINGS (As at June 30, 2022: Total Borrowings - US$ 65.53 bn) HDFC WITH YOU, RIGHT THROUGH 100% 4% 3% 2% 80% 43% 41% 41% External Commercial Borrowings ■Debentures & Securities 60% Term Loans 40% 20% 21% 24% Deposits 20% 33% 35% 33% 0% Jun-20 Jun-21 Jun-22 Total Borrowings: Rs. 5,174.52 bn (US$ 65.53 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 FY22 I Return on Loans 2.40% 2.35% 8.16% 2.30% 2.29% 2.25% 2.25% 2.20% 5.91% 2.15% 2.10% Q1FY23 Cost of Borrowings >>Spread Q1FY23 Spread earned on: Individual Loans 1.91% Non-individual Loans Loan Book 3.45% 2.25% Note: Q1FY23: There has been a short-term impact due to the transmission lag between the interest rate increase in borrowing costs and increase in lending rates. The Corporation has increased its benchmark lending rates and incrementally shifted from a quarterly reset for individual loans to a monthly reset to reduce the impact of transmission of rate changes. 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 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 30#31KEY 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 (%) # 21.9 22.2 Of which Tier 1 (%) # 21.4 21.5 Tier II (%) # 0.5 0.7 #As at June 30, 2022, capital adequacy ratio is after factoring in payment of dividend. 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: 1.81 billion. • Share Price (CMP as at July 31, 2022): Rs. 2,378 • Market Capitalisation: Rs. 4,315 billion (~US$ 55 bn) HDFC WITH YOU, RIGHT THROUGH Particulars Rs. bn US$ bn Net Worth 1,183 15.0 Add: Unaccounted gains on strategic 2,172 27.5 listed investments Add: Unaccounted gains on unlisted 258 3.3 investments Adjusted Networth 3,613 45.8 Market Capitalisation 4,315 54.6 Adjusted Price to Book Ratio 1.2 1.2 33#34• VALUATION – METHOD 2 - Number of shares outstanding: 1.81 billion. Share Price (CMP as at July 31, 2022): Rs. 2,378 • Market Capitalisation: Rs. 4,315 billion (~US$ 55 bn) Particulars Rs. bn US$ bn Market Capitalisation 4,315 54.6 Less: Unaccounted gains on strategic 2,172 27.5 listed investments Less: Unaccounted gains on unlisted 258 3.3 investments Adjusted Market Capitalisation 1,885 23.8 Net Worth 1,183 15.0 Adjusted Price to Book Ratio 1.6 1.6 HDFC WITH YOU, RIGHT THROUGH 34#35SHAREHOLDING PATTERN (As at June 30, 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) Jun-22 Jun-21 Growth (Rs. in billion) (Rs. in billion) (%) Sources of Funds Shareholders' Funds 1,183.41 1,121.90 Borrowings 5,174.52 4,380.71 18% Current Liabilities & Provisions 314.12 192.25 6,672.05 5,694.86 17% Application of Funds Loans (before provisions) ^ 5,810.40 5,004.90 16% Investments 749.54 688.44 Current/Fixed Assets 112.11 1.52 6,672.05 5,694.86 17% HDFC WITH YOU, RIGHT THROUGH ^Net of loans sold during the preceding 12 months amounting to Rs. 324.99 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 23%. 37#38FINANCIALS - Q1FY23 • Q1FY23 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 and to a slightly lesser extent on the net interest margin. • This has been due to the transmission lag between the interest rate increase in borrowing costs and the increase in lending rates • Benchmark lending rates have been increased; incremental individual loans have shifted to a monthly reset (previously quarterly) to reduce the transmission impact On account of volatile equity markets, the net gain on investments fair valued through the profit and loss account stood at Rs 0.08 bn (PY: Rs 4.02 bn) Dividend income was higher at Rs 6.87 bn (PY: Rs 0.16 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 ensuing quarters. 38#39STATEMENT OF PROFIT AND LOSS – Q1FY23 (Standalone) GHDFC WITH YOU, RIGHT THROUGH Q1FY23 Q1FY22 (Rs. in billion) (Rs. in billion) Growth (%) Net Interest Income Add: Income on derecognised (assigned) loans Add: Other Operating Income Net Operating Income 44.47 41.25 8% 2.83 2.68 0.76 0.62 48.06 44.55 Less: Non Interest Expenses 4.58 3.57 Less: Amortisation of ESOS and CSR Expenses 1.31 1.94 Add: Other Income 0.08 0.06 Profit Before Sale of Investments, Dividend, Fair 42.25 39.10 Value Changes and ECL Add: Net gain/(loss) on Fair Value Changes 0.08 4.02 Add: Dividend 6.87 0.16 Add: Profit on Sale of Investments 1.84 2.63 Less: Expected Credit Loss (ECL) Profit Before Tax Provision for Tax Profit After Tax Effective tax rate (%) 5.14 6.86 45.90 39.05 18% 9.21 9.04 36.69 30.01 22% 20.1% 23.1% 39#40KEY ASSOCIATES AND SUBSIDIARIES HDFC WITH YOU, RIGHT THROUGH#41HDFC BANK LIMITED • 21% owned by HDFC • ADRs listed on NYSE . 6,378 banking outlets, 18,620 ATMs • Key business areas- • HDFC WITH YOU, RIGHT THROUGH Wholesale banking | Retail banking | Treasury operations Financials (as per Indian GAAP) for the year quarter ending June 30, 2022 Advances as at June 30, 2022, stood at Rs. 13,951 bn an increase of 22% over the previous year Total deposits stood at Rs. 16,048 bn - - an increase of 19% over the previous year PAT (Indian GAAP): Rs. 91.96 bn an increase of 19% over the quarter ending June 30, 2022 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 (July 31, 2022): ~US$ 101 bn • 41 24#42HDFC WITH YOU, RIGHT THROUGH HDFC LIFE INSURANCE COMPANY LIMITED (HDFC LIFE) • 47.79% 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 Q1FY23 stood at Rs. 94 bn - growth of 23% over the previous year • HDFC Life recorded a growth of 20% in terms of individual weighted received premium (WRP) during the quarter ending June 30, 2022 with a market share of 14.6% in the private sector. In Q1FY23, the new business premium grew 27%. New Business Margin for Q1FY23: 26.8% (PY: 26.2%) Indian Embedded Value stood at Rs. 297 bn as at June 30, 2022 (PY: Rs. 273 bn) Assets Under Management as at June 30, 2022 stood at Rs. 2 trillion, an increase of 10% over the PY Solvency Ratio as at June 30, 2022 - 178% (regulatory requirement: 150%) PAT for Q1FY23 (Indian GAAP): Rs. 3.65 bn (PY: Rs.3.02 bn) Product mix - Unit Linked: 25%, Non-Par Savings: 34%, Annuity: 6%, Protection: 5%, Par: 30% HDFC International, (overseas subsidiary of HDFC Life) has received an in-principle approval from International Financial Services Centres Authority to set up a 'global in-house center' at GIFT City. Market capitalisation (July 31, 2022): ~US$ 15 bn 42 42#43HDFC WITH YOU, RIGHT THROUGH • • HDFC ASSET MANAGEMENT COMPANY LIMITED (HDFC AMC) 52.59% owned by HDFC and Abrdn Investment Management holds 16.21% of the equity of HDFC AMC Quarterly Average Assets under Management as at June 30, 2022, stood at Rs. 4.2 trillion (US$ 53 bn), with an overall market share of 11% Amongst India's largest actively managed equity mutual fund, with a market share of 11.5% as on June 30, 2022 Equity-oriented AUM of HDFC MF as a proportion of total AUM was 51% Individual accounts of HDFC MF as at June 30, 2022 10.2 million live accounts 62.1% of total monthly average AUM is contributed by individuals Market share of 12.6% of individual monthly average AUM In May 2022, HDFC AMC International (IFSC) Limited, located in Gujarat International Finance Tec-City (GIFT City), has been incorporated by HDFC AMC. • PAT for Q1FY23 (as per Ind AS): Rs. 3.14 bn • Market capitalisation (July 31, 2022): ~US$ 5 bn 43 43#44HDFC WITH YOU, RIGHT THROUGH • HDFC ERGO GENERAL INSURANCE COMPANY LTD. (HDFC ERGO) HDFC holds 49.98% and ERGO International AG holds 48.99% of the equity of HDFC ERGO Gross direct premium for Q1FY23 stood at Rs. 30.73 bn (PY: Rs. 23.86 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 64% of the total business Market share of 9.2% (private sector) and 5.6% (overall) in terms of gross direct premium for the quarter ended June 30, 2022 (Source: Gl Council) As at June 30, 2022: Solvency Ratio - 168% (as against regulatory requirement of 150%) Profit after tax for Q1FY23: Rs. 1.44 bn 44#45• . HDFC 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. 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 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 • 45 45#46HDFC WITH YOU, RIGHT THROUGH HDFC CREDILA FINANCIAL SERVICES LTD. (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 June 30, 2022 Profit After Tax (as per Ind AS): Rs. 0.60 bn - 35% growth ■ Cumulative loans disbursed: Rs. 174 bn Loan book outstanding: Rs. 94 bn • 33% of the loan book is collateralised ■ Gross non-performing assets: 0.20% 46 46#47FINANCIALS CONSOLIDATED (BASED ON INDIAN ACCOUNTING STANDARDS) HDFC WITH YOU, RIGHT THROUGH#48BALANCE SHEET (Consolidated) Sources of Funds HDFC WITH YOU, RIGHT THROUGH Jun-22 Jun-21 Growth (Rs. in billion) (Rs. in billion) (%) Shareholders' Funds 1,900.91 1,714.70 11% Liabilities Pertaining to Insurance Business 2,289.12 2,000.61 Loan Funds 5,256.94 4,435.75 Current Liabilities & Provisions 379.66 232.54 9,826.63 8,383.60 17% Application of Funds Loans 5,771.88 4,931.09 17% Assets pertaining to Insurance Business 2,426.46 2,131.65 Investments 1,269.80 1,132.44 Current Assets, Advances & Fixed Assets 305.60 172.41 Goodwill on Consolidation 52.89 16.01 9,826.63 8,383.60 17% 48 44#49STATEMENT OF PROFIT AND LOSS –Q1FY23 (Consolidated) HDFC WITH YOU, RIGHT THROUGH Q1FY23 Interest & Other Operating Income 129.73 Income from Insurance Business 99.51 Rs. in billion Q1FY22 122.88 183.76 Profit on Sale of Investment & Investment Properties 0.01 0.66 Income on derecognised (assigned) loans 2.58 2.60 Other Income 0.10 0.06 Total Income Finance costs 231.93 309.96 76.88 66.27 Expenses from Insurance Business 95.96 183.74 Non-Interest Expenses 10.36 8.99 Impairment on financial instruments 5.14 6.87 Total Expenses 188.34 265.87 Share of profit of associates (equity method) 21.85 18.85 Profit Before Tax 65.44 62.94 Total tax expense 9.70 9.84 Net Profit After Tax 55.74 53.10 Profit Attributable to the Corporation 53.09 50.41 49 49#50CONSOLIDATED PROFIT AFTER TAX - Q1FY23 (As per Ind-AS) HDFC Profit After Tax HDFC Life HDFC Ergo HDFC Bank HDFC AMC HDFC Credila HDFC WITH YOU, RIGHT THROUGH Q1FY23 (Rs. in billion) Q1FY22 (Rs. in billion) 36.69 30.01 1.01 1.22 0.37 (0.05) 21.39 18.44 1.65 1.82 0.60 0.44 0.19 0.04 Other Companies Adjustments: Dilution gain/loss from Associates Profit on Sale of Investments Dividend & Other Adjustments 0.46 0.41 (1.42) (1.44) (7.85) (0.48) Net Profit Attributable to the Corporation 53.09 50.41 50#51ESG HDFC WITH YOU, RIGHT THROUGH III ESG & OTHER INITIATIVES#52HDFC WITH YOU, RIGHT THROUGH THE ESG WAY: ENCOMPASSING ALL STAKEHOLDERS ENVIRONMENTAL • • . . 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 ~ 3/4 th of the lease rental discounting portfolio is certified as green by accredited green rating agencies 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 & sustainable deposits for retail depositors in Aug 21 Recognised amongst India's Top Sustainable Companies by Business World in association with Sustain Labs, Paris in FY22 Contd... 52 52#53THE ESG WAY: ENCOMPASSING ALL STAKEHOLDERS HDFC WITH YOU, RIGHT THROUGH SOCIAL • • . Shelter Assistance Reserve created in 1987: Set aside a portion of profits each year to support socially high impact projects Cumulatively financed 9.5 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... 53#54THE 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' 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 54#55ESG 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 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 55#56-D C ......... DASH PHILOSOPHY & DIGITALISATION OBJECTIVES Re-imagine and transform the customer journey across the lifecycle to improve customer experience and create market differentiation חוווי 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 Li HDFC WITH YOU, RIGHT THROUGH 56 99#57DASH 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 57 57#58July 29, 2022 HDFC WITH YOU, RIGHT THROUGH 58