HDFC Bank changing traditional model; housing finance to continue as core business

HDFC Bank, a state-owned institution, is in the process of changing its business model by rebalancing business operations but long term housing finance will remain its core activity.

In a media statement, HDFC Bank General Manager/CEO, Nimal Mamaduwa said under an amendment to the HDFC Act in 2011, HDFC is also able to diversify business operations.

“Under our new broader operations mandate, the bank plans to enter the country’s leasing, micro finance, SME and agriculture markets. For this purpose, the bank has already initiated a funding scheme with the Central Bank of Sri Lanka and the bank hopes to negotiate more such funding arrangements with specialized agencies. Through the Central Bank’s refinance scheme, HDFC is now ready to gain a foothold in mi- cro finance, SME lending and agricultural financing,” he said referring to the change of plans for the oncepredominantly housing loans’ bank which bears the name “Housing Development and Finance Corporation”.

He said the bank is expanding its short term asset base through new products and services which will promote greater operational flexibility while helping to spread the opera- tional risk. The bank has reported a post-tax profit of Rs. 38.4 million for the 1Q ending March 21, up from Rs. 4.9 million in the corresponding 2012 quarter.

Its deposit base rose to Rs. 14.5 billion from Rs. 11.9 billion in the same corresponding periods. Advances increased to Rs. 16.8 billion from Rs. 14.6 billion. Mr. Mamaduwa said the bank is continuing to develop new products and focus on expanding the savings base to strengthen low-cost fund base. Interest income improved by 26 per cent while interest expenses gained by 30 per cent during this period due to rising interest rates and the increase of the deposit base. However the net interest income has shown 19 per cent growth during the corresponding period.

This year, the bank says it will continue to promote the highly successful gold loans’ scheme.

“HDFC Bank’s transparency in communications is gaining recognition. HDFC Bank won the ACCA Sustainability Reporting Award for the 3rd consecutive year in the small scale category for the Bank’s 2011 Annual Report. This was HDFC’s first integrated report in line with international integrated reporting standards and was also a first for the local banking industry,” the state bank said.