Merger of HDFC Bank and HDFC Ltd is likely to get effective next month. The management highlighted tentative dates for the same on Tuesday and also when the merged entity is likely to start trading.

On the lending side | After excluding intra-company lending, advances are expected to reach Rs 22.2 lakh crore, representing a 38.85% increase from FY23 loan book of HDFC Bank.

This places HDFC Bank far ahead of ICICI Bank whose loans are at Rs 10.2 lakh crore; but behind State Bank of India (SBI) which is at Rs 32 lakh crore.

Deposits are projected to grow by 8.1% to Rs 18.8 lakh crore.

Net Interest Margin (NIM) | HDFC Bank currently has a better NIM compared to HDFC Ltd. However, with access to lower cost of funds, it is expected that HDFC Bank's NIM will see benefit from HDFC Ltd as well.

Operational efficiency will take place post-merger. The cost to income ratio of the merged entity will be at 35.2 percent for FY23 when compared to 40.4 percent that HDFC Bank has seen for FY23.

Return On Assets (ROA) | Both HDFC Bank and HDFC Ltd have a quarterly ROA of over 2 percent. The merger is expected to be accretive to ROA.

Reserves | Reserves are anticipated to increase by approximately 48 percent to Rs 4.1 lakh crore. The bank may not require additional capital in the medium to long term.

On equity increase | Taking into account the swap ratio and excluding HDFC Ltd's holdings in HDFC Bank, the equity of HDFC Bank is projected to increase by 34.34 percent, post the merger. Take into account, HDFC Ltd has 20.9 percent holding in HDFC Bank, including the ADR portion.

Asset Quality and Risk | Gross Non-Performing Assets (GNPA) are expected to rise by 49.7 percent to Rs 26,791 crore, while net non-performing assets (NNPA) are projected to increase by 96 percent to Rs 8,561.4 crore.

Post-Merger, GNPA ratio is estimated to be 1.16 percent (up from 1.12 percent), and NNPA ratio is projected to be 0.37 percent (up from 0.27 percent).

Provision coverage ratio (PCR) may decline to 68.3 percent compared to the current 75.8 percent.

Risk-weighted assets (RWA) to loans is expected to decrease to 92.8 percent from the current 99.1 percent.

The restructured book is projected to increase to 0.42 percent from the current 0.31 percent.

On branches and employees | The number of branches is set to increase by 6.7 percent to 8,344, and the employee base is expected to grow by 2.4 percent to 1,74,017.