HDFC Bank Ltd.: New senior bond looks attractive; higher call likelihood of HDFCB AT1

Research evidence excerpt

HDFC Bank Ltd.: New senior bond looks attractive; higher call likelihood of HDFCB AT1

highest among private banks and significantly higher than

CET1: common equity tier-1SBIIN at 12.3% (please see India IG financials: stable FY26 results).

HDFCB: HDFC Bank Ltd

Senior management turnover risk manageable

On the Chairman exit headline, based on the most recent update from our Indian NPL: non-performing loan

Conference in June (see equity team’s report: Resilient trends with emerging headwinds;

SBIIN: State Bank of IndiaBuy ICICI, HDFC), the bank expects the outcome of the external review on the case to be

available in the coming weeks. Further, management reiterated their confidence in PSB: public sector bank

internal governance and process. Management highlighted stable day-to-day operations

and expressed confidence in loan and deposit growth, both of which are expected to PSL: Priority Sector Lending

outpace the industry in FY27. The asset quality is also expected to be resilient with no

signs of stress evident despite macroeconomic uncertainties.

AT1: high call likelihood, with net redemption expected

We continue to see high call probability of HDFCB 3.7 Perp with call date on Aug. 25 and

USD1bn outstanding. Following the USD600mn senior bond issuance, the bank is likely

to see a net redemption of HDFCB AT1s, which should provide technical support to the

India AT1 market. We reiterate our OW HDFCB AT1 and prefer it over AXSBIN 4.1 Perp.

AXSBIN has weaker fundamentals and no USD bond outstandings. Thus, the USD

funding need would be higher for AXSBIN, in our view.

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