HDFC Bank to Double Retail Loan Book in Next 2 Years.
With a market cap of Rs.852,000 crore, HDFC Bank is India’s most valuable bank by. In fact, the gap is so wide that HDFC Bank‘s market cap is 74% more than ICICI Bank, which is ranked second. In terms of total business (as defined by the aggregate of loans and deposits), HDFC Bank is the largest private sector bank and second only to SBI overall.
However, the HDFC Bank retail loan portfolio faced some stiff challenges in the recent past. The credit cards business lost 2% market share in the last 8 months before the RBI lifted the ban on HDFC Bank issuing fresh credit cards. The retail loan share of HDFC Bank fell sharply from 55% to 46% in the last 3 years. To an extent, this was a conscious effort by HDFC Bank, but now it is doing a rethink.
The game plan for HDFC Bank is to go aggressive on retail lending portfolio. Just 2 days back, HDFC Bank had announced a tie-up with Paytm to issue co-branded credit cards to leverage on the massive 30 crore digital client base of Paytm. This will also help HDFC Bank recoup its market share in the credit card market, where it lost 2% market share to SBI, ICICI Bank and Axis Bank.
Read more:- RBI allows HDFC Bank to issue Cards
But the real action is likely to happen on the consumer lending portfolio. Let us look at some numbers. Out of its total loan book of Rs.11,50,000 crore, the retail book is about Rs.375,000 crore. Now, HDFC plans to adopt an aggressive strategy to increase this retail book from Rs.375,000 crore to Rs.800,000 crore in next two years. This will ensure HDFC Bank recoups its 55% market share of retail, as it stood 3 years back.
The big advantage for HDFC Bank in this retail push is that its gross NPAs are still well below the peer group. While the gross NPAs of ICICI Bank and SBI are around 5%, Kotak Bank and Axis Bank have gross NPAs of above 3.5%. In comparison, the gross NPA ratio of HDFC Bank is just about 1.6%. That is a big edge.
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