HDFC's merger to be booster shot for HDFC Bank, diversify its revenues: S&P

Profitability could to take hit in the short run

Standard and Poor’s (S&P) on Monday said the planned merger of mortgage major HDFC with HDFC Bank will boost the India-based bank's market share and diversify its revenues. However, the profitability in the shorter term could be hit due to statutory reserve requirements and priority sector lending regulations, the rating agency said.

The combined entity's capitalization and asset quality to be broadly in line with those of HDFC Bank on a stand-alone basis. About nine per cent  of HDFC Ltd's portfolio comprises loans to real estate developers, where the asset quality is weaker than for the rest of the bank's