At Rs 6.84 lakh Crore, HDFC Bank's Home Loan Book Closes Gap With SBI's

The largest private sector lender HDFC Bank on Thursday said its home loan book reached Rs 6.84 lakh crore in the December quarter, closing the gap with its public sector rival State Bank of India.

SBI, the country's largest lender, has a home loan book of Rs 6.94 lakh crore.

SBI overtook HDFC in home loan assets in February 2021 when its book crossed the Rs 5 lakh crore-mark with a market share of 23.5% as against HDFC's 17%.

Before merger, HDFC Bank's parent firm HDFC was the market leader in the segment for several decades.

In the December quarter, SBI added 13.6% to its home loan book on-year to reach Rs 6.94 lakh crore, and 3.22% sequentially from Rs 6.72 lakh crore.

On the other hand, HDFC Bank added 3.6% sequentially to its home loan AUM to reach Rs 6.84 lakh crore. Annualized comparison is not possible as the merger with HDFC came into force in July 2023.

According to the March 2023 balance sheet, HDFC Bank after the merger reemerged as the market leader in home loan with a book of Rs 7.3 lakh crore, compared to SBI's Rs 6.4 lakh crore. Of this HDFC's home loan portfolio was Rs 6.25 lakh crore and that of HDFC Bank was Rs 1.02 lakh crore.

This means that HDFC Bank, despite the merger and faster than average industry growth in the December quarter, has lost the market share.

However, Arvind Kapil, head of home loans and mortgages at HDFC Bank, told reporters here that the bank added a little over 20% of the incremental home loan sales in the December quarter and grew at the fastest pace among all other lenders with a 3.6% sequential growth, taking its total AUM past the Rs 6.84 lakh crore level.

"Our home loan book at Rs 6.84 lakh crore today contributes 30% of our balance sheet of over Rs 25 lakh crore. More than 20% of the incremental market growth came from us during the past quarter which on a sequential basis clipped at 3.6%, which was the fastest among all home loan players," Kapil said.

As against this, SBI's balance sheet jumped to Rs 35.84 lakh crore, growing 14.38% on year from Rs 31.33 lakh crore.

Last August, chairman Dinesh Khara had told PTI that SBI has been, is and will be the largest home loan lender, after the bank reported a 13.47% growth in the home loan book at Rs 6.53 lakh crore in the first quarter of FY24.

Asked about his views on the mortgage market following the exit of HDFC after its merger with HDFC Bank on July 1, Khara even said that SBI's mortgage book is worth over Rs 6.52 lakh crore as of the June quarter.

After the Q1FY24 earnings announcement, Khara had told PTI, "We have been the largest, we are and we will continue to have the largest home loan book. In fact, in July we have grown more than 15% and going forward and especially with the festival season coming closer I see this growing far more."

In February 2021, Khara had said that the SBI had set an internal target of doubling the book to Rs 10 lakh crore in the next five years and to Rs 7 lakh crore by FY24, which is well within its reach now.

Kapil told PTI that since the merger, HDFC Bank has made some rapid strides in turnaround time of loan processing. We want to further reduce the time line, if not our 10-seconds personal loan disbursal mode, something much shorter.

He also said that since the merger, as much as 80% of the new home loan customer open savings accounts with us, which was pre-merger only around 35%.

This is the easiest way to widen our already industry leading CASA (current account savings account) base, he said, adding this sets the foundation for a stronger digital connect with incremental customers and cross selling.

The scope for cross-selling is too high in the home loan space with no incremental cost, as a home buyer will also buy consumer durables and other items for the new home. But consumer finance on a standalone basis is a low yielding and high cost business.

Kapil also said the bank will launch home refurbishment loans from mid-March, which can become a strong product offering. By April, it will offer home saver product which will act like an over draft facility against deposits. This product will lay a robust foundation for a lucrative offering to the existing and prospective home buyers.