HDFC Bank CEO's exit puts focus on growth recovery, leadership reset

Sashidhar Jagdishan's exit puts HDFC Bank's next leadership team under scrutiny as investors seek stronger growth, better lending mix and improved returns

Sashidhar Jagdishan’s decision to not seek another term as managing director and chief executive officer (MD & CEO) of HDFC Bank has shifted investor focus to how the lender’s next leadership team will steer its business after a difficult post-merger period.

 

Analysts expect HDFC Bank’s operating performance to improve, but see the need for stronger growth, better lending mix and improved returns.

 

The bank reported a standalone net profit of ₹19,060 crore in the first quarter of financial year 2026-27 (Q1FY27), up 5 per cent year-on-year (Y-o-Y). Gross advances grew 15.4 per cent, while deposits rose 14.7 per cent during the quarter.

 

 

Motilal Oswal Financial Services Ltd (MOFSL) expects the improvement in operating performance to become more visible from the second half (H2) of FY27, with earnings growth moving into the mid-teens in FY28.

 

Macquarie, meanwhile, sees the bank’s post-merger balance-sheet recalibration as still incomplete, making the execution by the next management team important for the recovery.

 

The growth recovery will also depend on the bank improving its funding and lending mix. MOFSL expects loans to grow at around 12 per cent annually between FY26 and FY28, while deposits are expected to grow at around 13 per cent. Deposit growth exceeding loan growth should help the bank gradually lower its credit-deposit ratio.

 

Improving the mix of lending will be important for yields as well. 

 

Macquarie Capital noted that HDFC Bank needs to up the ante on retail loans and secure better yields from personal loans and loans against property. The note highlighted that improving yields and share of current account and savings account (CASA) deposits are the two issues which the new CEO needs to address.

 

“Fundamentally we believe the bank is in a tough spot. While it can still keep ROAs (return on assets) around 1.7-1.8 per cent (unless there is further sharp deterioration in CASA franchise), now there will be new challenges like addressing employee morale, etc., which will crop up due to a series of issues that has happened,” Suresh Ganapathy of Macquarie Capital said.

 

The leadership change, therefore, comes at a time when investor confidence is already under pressure. Macquarie said Jagdishan’s exit “adds a fresh layer of uncertainty when investor confidence is already fragile and the post-merger balance-sheet recalibration remains incomplete”.

 

The concerns extend beyond the CEO position. HDFC Bank has seen several senior-management exits during Jagdishan’s tenure, including Retail Head Arvind Kapil in April 2024, Chief Human Resources Officer (CHRO) Vinay Razdan in June 2025, and Retail Head Rahul Shukla in October 2025.

 

Broking firm Equirus said the “depth and stability of the senior-management bench under the new CEO will, therefore, be an important monitorable”.

 

On the choice of successor, Equirus assigned a higher probability to an external candidate. It said an external appointment could provide a sharper reset following the governance overhang and senior-management churn, while bringing a different perspective to HDFC Bank’s post-merger strategy.

 

MOFSL sees the broader leadership change as potentially positive for the bank. “The changes in its leadership team will help address the scepticism that has engulfed the bank over the recent period,” it said, adding that a new leadership team along with an improvement in growth and earnings should improve investor sentiment.

 

The immediate challenge for HDFC Bank will, therefore, be to manage the leadership transition while delivering on the expected recovery in credit growth, retail lending, margins and returns. The board’s choice between an internal candidate offering continuity and an external candidate offering a sharper reset could shape how investors view the bank’s next phase.