Retail credit adds to 23% loan book expansion: HDFC Bank

Moneycontrol Bureau

No surprise, the market as usual cheered HDFC Bank's second quarter (July-Sept) performance. However, the rejoice may have come with some amount of monotony as well. Net profit rose 30% year-on-year. Even the executive director could not remember since how many quarters, it has been growing at the same magic figure.
Its shares on Friday ended at Rs 631, up nearly 1% as against a half percent fall in 50-share Nifty index.
According to Paresh Sukthankar, the executive director, it is the retail credit, which ran the show during the quarter. A sharp 23% rise in loan book when a majority of the industry players is struggling to achieve 17% mark, projected by RBI in FY13.  Also read: HDFC Bank Q2 PAT up 30% aided by robust loan growth
"Our share of retail lending rose to 53% to our total loan book as compared to 51% in the previous quarter. The retail book grew 32% y-o-y as against around 14% expansion on corporate credit side. In the three months period, we disbursed retail loans around Rs 11,275 crore as against around Rs 7,000 crore given to corporates,” he said addressing a conference call.
In Q2, the bank acquired a home loan portfolio (moneycontrol.com could not confirm the value of the portfolio) from HDFC Ltd, the parent company. This too added to the retail loan expansions. The lender expects to maintain the net interest margin or the difference between interest earned and expended, in the range of 3.9-4.20%.
"We are likely to outpace the industry average both loans and deposits front. Historically, we have grown 3-5% higher than the industry average. In the last few quarters, our credit book is a little better diversified," Sukthankar said adding that the overall working capital demand from corporate along with retail loans are still holding on.
HDFC Bank's deposit base rose nearly 19% to Rs 2.74 lakh crore. After a series of deposit rate cuts, the management sees limited scope for further rate cut unless RBI comes out with a fresh policy action. Deposit costs have come down by 50-75 bps.
"Out of our total deposits, 20-25% comprises corporate deposits and the rest are retail deposits. Now-a-days the segmentation between retail and bulk deposits does not really exist,” said the executive director.
Commenting on future lending rate cuts, Sukthankar said that the bank would respond to market directions as and when it is required.
"The benefit of cash reserve ratio we already passed it on in June when we had cut our base rate from 10% to 9.80%. Our base rate is probably among the lowest rates in the industry," concluded Sukthankar who believes, the recent reform measures will not immediately lead to any uptick in corporate lending. It will take at least two quarters for companies to start green field projects.
saikat.das@network18online.com