At Rs 6.84 lakh crore, HDFC Bank's home loan book closes gap with SBI's

The largest private sector lender, HDFC Bank, said on Thursday that 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 per cent as against HDFC's 17 per cent. Before the 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 per cent to its home loan book on-year to reach Rs 6.94 lakh crore, and 3.22 per cent sequentially from Rs 6.72 lakh crore. On the other hand, HDFC Bank added 3.6 per cent sequentially to its home loan AUM to reach Rs 6.84 lakh crore. Annualised 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 loans 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 its 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 per cent of the incremental home loan sales in the December quarter and grew at the fastest pace among all other lenders with a 3.6 per cent sequential growth, taking its total AUM past the Rs 6.84 lakh crore level.

"Our home loan book of Rs 6.84 lakh crore today contributes 30 per cent of our balance sheet of over Rs 25 lakh crore. More than 20 per cent of the incremental market growth came from us during the past quarter, which on a sequential basis clipped at 3.6 per cent, 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 per cent 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 per cent 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 Q1 FY24 earnings announcement, Khara 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 per cent and going forward, especially with the festival season coming closer, I see this growing far more." 

In February 2021, Khara 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 the turnaround time of loan processing. We want to further reduce the timeline, if not our 10-second personal loan disbursal mode, to something much shorter.

He also said that since the merger, as much as 80 per cent of the new home loan customers "opened savings accounts with us," compared to only around 35 per cent pre-merger.

This is the easiest way to widen our already industry-leading CASA (current account savings account) base, he said, adding that 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 in mid-March, which can become a strong product offering. 

By April, it will offer a saver product that will act like an overdraft facility against deposits. This product will lay a robust foundation for a lucrative offering to existing and prospective home buyers.