HDFC Bank, the largest private sector lender, has made significant strides in its home loan business, reaching a home loan book of Rs 6.84 lakh crore in the December quarter. This puts HDFC Bank in close competition with its public sector rival, State Bank of India (SBI), which has a home loan book of Rs 6.94 lakh crore. This article explores the recent developments in the home loan market and the performance of HDFC Bank and SBI.
HDFC Bank’s Journey in the Home Loan Market:
HDFC Bank, the subsidiary of HDFC, was the long-standing market leader in the home loan segment. However, in February 2021, SBI surpassed HDFC Bank in home loan assets when its book crossed the Rs 5 lakh crore mark. SBI’s market share stood at 23.5% compared to HDFC Bank’s 17%. Despite this setback, HDFC Bank has shown resilience and a strong comeback in the home loan market.
Recent Performance and Market Share:
In the December quarter, SBI added 13.6% to its home loan book on a year-on-year basis, reaching Rs 6.94 lakh crore. The sequential growth was 3.22% from Rs 6.72 lakh crore. On the other hand, HDFC Bank recorded a 3.6% sequential growth, taking its home loan assets under management (AUM) to Rs 6.84 lakh crore. It’s important to note that a direct annualized comparison is not possible due to the merger with HDFC in July 2023.
Impact of the Merger:
Following the merger with HDFC, HDFC Bank reemerged as the market leader in home loans, as stated in the March 2023 balance sheet. The combined home loan book stood at Rs 7.3 lakh crore, with HDFC contributing Rs 6.25 lakh crore and HDFC Bank contributing Rs 1.02 lakh crore. Despite this, HDFC Bank has experienced a decline in its market share in the recent period.
HDFC Bank’s Growth and Perspective:
Arvind Kapil, the head of home loans and mortgages at HDFC Bank, emphasized that the bank added over 20% of the incremental home loan sales in the December quarter, growing at the fastest pace among all other lenders. With a sequential growth of 3.6%, HDFC Bank’s total AUM crossed the Rs 6.84 lakh crore mark, contributing 30% to the bank’s balance sheet of over Rs 25 lakh crore.
SBI’s Performance and Market Standing:
SBI’s balance sheet has grown to Rs 35.84 lakh crore, marking a 14.38% year-on-year growth. Chairman Dinesh Khara has repeatedly emphasized SBI’s strong position in the home loan market. In the June quarter, SBI’s mortgage book was worth over Rs 6.52 lakh crore.
Financial Performance:
HDFC Bank reported stable double-digit year-on-year growth in its home loan business for two consecutive quarters ending December 31, 2023. This growth was supported by a wider distribution network. In Q3FY24, HDFC Bank reported a 33% year-on-year increase in net profit to ₹16,372 crore, with net interest income rising by 24% year-on-year to ₹28,470 crore.
Conclusion:
HDFC Bank’s home loan book has made impressive progress, closing the gap with SBI and reestablishing itself as a key player in the market. Despite the merger with HDFC and challenges faced, HDFC Bank has exhibited strong growth and remains a significant contributor to the bank’s overall balance sheet. SBI, on the other hand, continues to assert its dominant position in the home loan market, with a substantial mortgage book. The competition between these two giants promises to shape the future of the home loan industry in India.
