HDFC Bank’s home loans growing faster post-merger, aiding CASA deposit growth

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Growth in HDFC Bank’s home loan book has been faster post-merger of parent company HDFC with the bank effective July 2023, growing at over 3.5 per cent sequentially for the past two quarters. On-year growth was in double digits for the first six months post-merger, led by a wider distribution network and a reduction in processing turnaround time to nearly one-third of the pre-merger rate. 

In Q3 FY24, the home loan portfolio grew 3.6 per cent on quarter, the highest among peers, to nearly ₹6.8-lakh crore, said Arvind Kapil, Country Head, Mortgage Banking, Home Loan, LAP, HDFC Bank.

“Pre-merger, about 30-35 per cent of incremental disbursals were to customers with an HDFC Bank savings account. This has reached about 80 per cent, post-merger. The home loan business has become both an asset and a liability generator and is growing sizeably. This leads to a higher stickiness quotient and a stronger customer connection for a longer duration,” he said.

HDFC Bank’s CASA deposits grew by 2.2 per cent sequentially to ₹8.4-lakh crore as of December 2023. The CASA ratio improved to 37.7 per cent from 37.6 per cent over the same period.

Market share

The bank’s market share has grown by 20 per cent on incremental disbursals post- merger, aided by erstwhile HDFC’s strength in connecting with customers, which has helped both in terms of sales turnover and cross-selling. The bank is also focussing on the self-employed segment, for which it has launched and expanded its product basket through banking surrogates as well as GST programmes for better assessment of such profiles.

The private sector lender is in the process of converting all of HDFC’s service centres to branches in a phased manner, and the entire mortgage team will become relationship managers. It has commenced cross-selling of products such as consumer durable loans, credit cards, wealth advisory, unsecured loans, and refurbished loans through these service centres from February 2024. 

It also has plans to launch a ‘straight through journey’ for home refurbishment loans by mid-March, and a ‘Home Saver’ product by April, as offerings catered to both existing and prospective home buyers.