HDFC Bank Aggressively Disbursing Retail Loans, Contrasting with ICICI Bank's Cautious Approach

HDFC Bank Ltd, India's second-largest private bank, is enthusiastically disbursing retail loans, primarily catering to the rural market. The bank has seen significant growth in its retail business, rising 30% year-on-year, primarily driven by demand from areas outside the nine major cities. HDFC Bank's retail business has expanded as the bank organizes "loan melas," a marketing campaign that promotes disbursement of loans at a branch. In contrast, ICICI Bank Ltd, India's largest private lender, has been shedding retail assets and concentrating on building its corporate loan book.

Key Takeaways:

• HDFC Bank has disbursed an average of approximately Rs 5,000 crore each month in the first quarter of fiscal 2012 to finance personal loans, commercial vehicles, auto, and two-wheeler loans.
• The bank's retail business has grown 30% year-on-year, mainly because half of it has come from places outside the nine cities, which has grown very fast on a smaller base through loan melas and branch distribution.
• ICICI Bank made a loss of Rs 84.14 crore in April-June 2011 in the retail segment, compared with a loss of Rs 217.33 crore in the corresponding period last year.
• HDFC Bank has 2,111 branches, with 1,477 of them located outside the nine large cities, enabling the bank to maintain stability in both the upward and downward cycles of the economy.
• The bank is planning to organize 250 loan melas this year, aimed at boosting the loan book, with a significant focus on substantial business from rural branches.
• HDFC Bank's incremental loan book grew Rs 15,000 crore to Rs 1.75 trillion in the quarter ended June, whereas ICIC Bank's incremental book rose Rs 4,300 crore to Rs 2.2 trillion.

Statistics:

• HDFC Bank disbursed an average of approximately Rs 5,000 crore each month in the first quarter of fiscal 2012 to finance retail loans.
• HDFC Bank's retail business has grown 30% year-on-year, mainly driven by demand from areas outside the nine major cities.
• ICICI Bank made a loss of Rs 84.14 crore in April-June 2011 in the retail segment.
• ICICI Bank's unsecured consumer loans make up just 2.1% of total advances, down from 3% last year.
• HDFC Bank has 2,111 branches, with 1,477 of them located outside the nine large cities.
• HDFC Bank is planning to organize 250 loan melas this year to boost the loan book.

Sources:

• HDFC Bank Ltd
• ICICI Bank Ltd
• LKP Securities Ltd
• Espirito Santo Securities
• McClatchy-Tribune Information Services