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MUMBAI : India’s largest lender State Bank of India (SBI) is gearing up to take on competition resulting from the merger between mortgage lender Housing Development Finance Corp (HDFC) and HDFC Bank, chairman Dinesh Khara told shareholders on Wednesday.
“SBI is the largest home loan provider in the country. Our home loan market share stands at 35.3%; we are very mindful of HDFC-HDFC Bank merger and are taking necessary steps to counter the emerging competition," Khara said at the bank’s 67th annual general meeting.
Khara was referring to the announcement in April that HDFC Bank will take into its fold, promoter HDFC Ltd in a deal that would make the bank more competitive and allow access to a captive customer base to cross sell products. The merger, expected to close in 18 months and subject to regulatory and other approvals, would significantly widen its lead over private sector peers ICICI Bank and Axis Bank, in terms of total loans.
Currently, HDFC Bank is in the home loan business in conjunction with HDFC Ltd. As per the arrangement, HDFC Bank sells home loans while HDFC Ltd approves and disburses them. HDFC Bank receives a sourcing fee for these loans and has the option to purchase up to 70% of the fully-disbursed loans.
Computed based on data as on 31 December, the merged HDFC Bank would have a loan book of ₹17.9 trillion, way ahead of ₹8.14 trillion of ICICI Bank and ₹6.65 trillion of Axis Bank. India’s largest lender State Bank of India (SBI) had total loans of ₹26.64 trillion at the end of December.
As per disclosures made as part of the merger announcement, 33% of the ₹17.9 trillion loan book or ₹5.9 trillion would have been in mortgages as on 31 December 2021. Meanwhile, SBI’s home loan book stood at ₹5.4 trillion as on 31 December.
As on 31 March, SBI’s home loan portfolio stood at ₹5.61 trillion, up 11.5% from the previous year. SBI’s home loan book has grown from about ₹1 trillion in 2011 and now accounts for 23.87% of the bank’s total advances. The bank disbursed close to ₹1.46 trillion in home loans and other related loans in 2021-22, it said in its latest annual report.
“Further digitization of the entire home loan journey is at an advanced stage. In-house developed digital platforms like Yono and Online Customer Acquisition Solution/ Retail Assets Acquisition Solution are being promoted extensively as resource tools to maximize home loan business and increase our market share," SBI said in the annual report.