HDFC Bank, the country’s second-largest private bank, has moved to the top of the pile in the retail banking segment, displacing ICICI Bank as the recovery in demand and robust economic growth helped the bank to lend more to customers buying cars, homes and two-wheelers. The Mumbai-based bank has seen a record lending of Rs 4,000 crore for the month of March, which is more than double of what it had disbursed in the month of April 2009. The loan growth is spread across several segments of retail banking such as automobile loans, commercial vehicles, personal and home loans, two-wheeler loans and credit cards. HDFC Bank’s retail lending in March this year was marked by disbursements of Rs 1,300 crore in auto loans in, Rs 1,200 crore in home loans, Rs 400 crore in the form of commercial vehicle loans and Rs 300 crore of construction equipment loans. Its personal loan book aggregated Rs 600 crore compared with Rs 425 crore in March 2009. The bank markets home loans of its parent HDFC and then buys back portions of such loans. The bank had disbursed retail loans of Rs 3,000 crore in October, Rs 1,800 crore in April 2009 and Rs 2,700 crore in June 2008 before the global financial crisis. The spike in lending comes at a time when its peers have sought to apply the brakes on lending to the retail segment after taking a hit mainly on unsecured credit in the form of personal loans and credit cards. Bad loans rose last fiscal as the economic slowdown in 2008-09 impacted the ability of customers to repay loans with firms slashing jobs and cutting salaries to combat the downturn then. “This has been the best ever month for us. In March itself, we disbursed retail loans of Rs 4,000 crore and this comes on the back of January and February where the average disbursements were at around Rs 3,500 each. Each of our business in the retail side is profitable and we have shown the highest-ever profit in the retail asset business,” said Pralay Mondal, country head — retail assets & credit cards, HDFC Bank. ICICI Bank — India’s largest private lender and the market leader until now — is estimated to have disbursed home loans aggregating Rs 700 crore, auto loans of Rs 300 crore, commercial vehicle loans of Rs 200 crore and loans against property of close to Rs 150 crore, according to officials in the banking industry, who did not want to be named. After 2008-09, ICICI Bank, which was seen as the aggressive face of retail lending in India, changed track and started shrinking its retail loan book. The bank is now focusing only on secured loans having cut down on its loan exposure to unsecured loans. The bank has also pruned its credit cards from a peak of 8.5 million to close to 5 million now. At its peak, ICICI Bank used to disburse over Rs 1,200 crore in auto loans compared with HDFC Bank’s Rs 500 crore. State Bank of India — the country’s largest bank, which has been aggressive in trying to increase its market share, is learnt to be booking close to Rs 2,500 crore in home loans, and disbursements of close to Rs 650-700 crore in auto loans. SBI, along with its subsidiaries, is said to have disbursed close to Rs 1,100 crore in auto loans. However, unlike private banks, SBI and other state-run banks are more recent entrants in the retail banking segment. Says Mr Mondal: “We have retained our margins. Our bad loans started coming down from the first quarter of the last financial year. The bad loans in most of our products were lower than four years ago. We have not been dependent on price to get market share and we believe that we can do it consistently.” Part of the reason for the surge in retail lending could be because of increasing consumer confidence and rising wages. “Consumer confidence is high. Customers are seeing their income rising. Even if there is a marginal hike in interest rates, we are prepared to take a larger pie of the market,” said Mr Mondal. Retail banking brings in close to 70% of the revenues for HDFC Bank and constitutes 55% of the asset book. The retail and corporate banking business contributes equally to the profits of the bank. “Our unsecured loans is at 20% of the retail book. It has remained constant. The credit card business has grown slower. However, in the past few months, we have started growing our credit cards business. We are issuing 85,000-90,000 new cards a month. We are the largest incremental acquirer of credit cards. In another six months, there won’t be a debate as others have been eroding their market share,” added Mr Mondal. IndusInd Bank also said the bank recorded quarter on quarter growth of 6% in the consumer finance portfolio for the fourth quarter of last year.
