SBI gears up to fight merged HDFC Bank


MUMBAI : State Bank of India (SBI) is taking steps to take on the combined strength of Housing Development Finance Corp. (HDFC) and HDFC Bank, following the merger, 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 the HDFC-HDFC Bank merger and are taking necessary steps to counter the emerging competition, “Khara said at the bank’s 67th annual general meeting.

HDFC Bank and HDFC had announced a deal in April, to make the merged entity more competitive, and allowing access to a captive customer base to cross-sell products. The merger, expected to close in 18 months subject to regulatory and other approvals, will 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. As per the arrangement, HDFC Bank sells home loans, while HDFC approves and disburses. HDFC Bank gets a sourcing fee for the transactions and has the option to purchase up to 70% of the fully-disbursed loans. As of 31 December, the merged entity’s loan book is at 17.9 trillion, way ahead of ICICI Bank’s 8.14 trillion and Axis Bank’s 6.65 trillion. SBI had total loans of 26.64 trillion at the end of December.

According to disclosures as part of the merger announcement, 33% of the 17.9 trillion loan book, or 5.9 trillion, will be in mortgages as of December end. Meanwhile, SBI’s home loan book stood at 5.4 trillion as of 31 December.

As of March 31, 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 to now account for 23.87% of its total advances. The bank disbursed close to 1.46 trillion in home loans and other related loans in 2021-22, its latest annual report showed.

“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 the home loan business and increase our market share, “SBI said in the annual report.

The bank is also accelerating its digital agenda, including expanding the scope and reach of the Yono app using advanced analytics. “The bank will explore mutually-beneficial partnerships with fintechs and non-banking financial companies to increase penetration and reach of the lender,” Khara was quoated in SBI’s annual report. As of March, SBI had 22,266 industries, over 68,000 business correspondents and over 65,000 automated teller machines, including 12,872 automated deposit and withdrawal machines.

In March, Mint reported that SBI is planning a separate digital entity and will revamp its mobile app, rechristening it Only Yono, as part of its decision to be future-ready.

The annual report said as on 31 March, Yono has seen 111.74 million downloads, opened 26,000 new digital savings bank accounts per day and has 48.35 million registered users.

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