Faced with a situation where earnings growth has hit an 18-year low and rising costs, HDFC Bank has reduced its headcount by nearly 4,500 employees during the October- December quarter 2016. This is the largest reduction in headcount reported by a bank in a single quarter. Analysts said that the trend might continue if the country’s economic engine does not gain traction fast enough.
HDFC Bank indicated that it may go slow on hiring, as it focuses on increasing productivity using different strategies including accelerated automation. HDFC Bank’s headcount in September 2016 was 95,002, which fell to 90,421 in December 2016, registering a drop of 5%. In a statement, the Bank said that the drop in headcount is a combination of natural attrition and hiring at a slower pace than normal.
Even when the Bank’s net profit has grown 15%, from Rs 3,357 crore to Rs 3,865 crore, it is still the slowest profit growth since June 1998. Pre-tax profit in trading of bonds and currencies reduced to Rs 253 crore, from Rs 513 crore a year earlier, whereas fee income rose only 9.4% year-on-year as some channels of the bank’s fee sources were affected by demonetization.