Green Shoots Seen in Mid-seg­ment, SMEs

The Economic Times - - Commodities & Markets -

HDFC Bank, In­dia’s most valu­able lender, is di­ver­si­fy­ing into cor­po­rate lend­ing in an ag­gres­sive way, which crossed the .₹ 1-lakh crore mark at March-end 2016, as it senses greater com­pe­ti­tion in re­tail lend­ing. In an in­ter­view with ET’s Saloni Shukla, Paresh Suk­thankar, deputy man­ag­ing di­rec­tor of HDFC Bank, said there are ad­e­quate op­por­tu­ni­ties in both cor­po­rate and re­tail seg­ments, and if capex picks up, the bank’s cor­po­rate book will get a fur­ther boost. Edited ex­cerpts. The re­tail mar­ket has seen greater com­pe­ti­tion with many tra­di­tional cor­po­rate banks aim­ing for a big­ger pie. How do you view this? We are about 51-49% (re­tail to cor­po­rate mix), so we are roughly half and half. Cor­po­rate is just one of our whole­sale seg­ments. When you look at the 49%, cor­po­rate and other seg­ments are in whole­sale, and 51% is the consumer part. There are two things — one is at what pace the un­der­ly­ing in­dus­try in the re­tail part is grow­ing. So, if you are look­ing at car loans, how fast are car and com­mer­cial ve­hi­cle loans grow­ing. And within that, what’s our mar­ket share. We are a mar­ket leader in most re­tail loan prod­ucts, and are well­po­si­tioned to main­tain our mar­ket lead­er­ship. For­tu­nately, if you look at the last cou­ple of quar­ters, the un­der­ly­ing mo­men­tum in a lot of th­ese in­dus­tries has im­proved. So, com­mer­cial ve­hi­cle sales, which were lan­guish­ing till a few quar­ters back, have veered into pos­i­tive ter­ri­tory, es­pe­cially in the medium and heavy com­mer­cial ve­hi­cles. We have other prod­ucts such as per­sonal loans where we have al­ways been a mar­ket leader and con­tinue to grow. Credit cards and busi­ness bank­ing have done well. Our Kisan gold card in the agri­cul­ture lend­ing sec­tion has also done well. Has the com­pe­ti­tion af­fected you? We have shown that we have the re­silience to pro­tect our share, and grow it, even in the wake of com­pe­ti­tion. Since we be­lieve that we have a strong brand, we have in­vested in dis­tri­bu­tion. A lot of our dig­i­tal ini­tia­tives have helped in the loan orig­i­na­tion side. I don’t think there are too many play­ers who have as wide a range of re­tail prod­ucts like ours, and we have the ad­van­tage of de­liv­er­ing brand, dis­tri­bu­tion, and ser­vice qual­ity. Will you be will­ing to take on riskier cor­po­rate as­sets to grow your book? If the econ­omy starts look­ing up on the back of an in­vest­ment re­vival, then there will be op­por­tu­ni­ties to grow the cor­po­rate book a lit­tle more. Be­cause, the cor­po­rate busi­ness is grow­ing pri­mar­ily on the back of say, work­ing cap­i­tal, medium-term loans and very lit­tle of term. I think within our credit ap­petite, there will be credit op­por­tu­ni­ties for us to pick up. Even if what has hap­pened in the past 4-5 quar­ters, when cor­po­rates were be­ing per­ceived as high risk, we have been able to grow our book by about 20%, and that has not been by chang­ing our risk pro­file. So, I would say there are ad­e­quate op­por­tu­ni­ties in both whole­sale and re­tail space — we have shown that in the past sev­eral years, in­clud­ing last quar­ter. If there is some pick-up in capex, then cor­po­rate should get a bit of a boost. In your cor­po­rate book, what are some of the bright spots — sec­tors that are see­ing green shoots? You will cer­tainly see some spurt in de­mand in the auto sec­tor or chem­i­cal and fer­tiliser in­dus­tries. But those tend to de­pend on quar­ter to quar­ter be­cause th­ese are short-term spikes. But rather than just fo­cus on a few sec­tors, our strat­egy has been that if you have a di­ver­si­fied book and you stick to bet­ter placed play­ers, then it will cer­tainly sup­port growth. And again it’s not just the large cor­po­rates, it is the mid­seg­ment which is emerg­ing, as well as the SMEs.

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