#HDFCBank reported a healthy double-digit growth in its home loan business post #HDFC merger.
Country head for mortgage banking, Arvind Kapil, shares details of company's new loan products in a conversation with Pragatti Oberoi.
For the latest news and updates, visit ndtvprofit.com
Country head for mortgage banking, Arvind Kapil, shares details of company's new loan products in a conversation with Pragatti Oberoi.
For the latest news and updates, visit ndtvprofit.com
Category
📺
TVTranscript
00:00 We're here at HDFC Bank's media roundtable,
00:03 where the primary topic of discussion
00:05 was the bank's home loan business,
00:07 especially post-merger.
00:08 Joining us for a conversation is Mr. Arvind Kapil,
00:11 the country head of mortgage banking at the bank.
00:13 Sir, thank you so much for joining us.
00:15 My first question to you is about a new product,
00:18 or rather a new offering that you've
00:20 talked about, the home refurbishment loans.
00:23 So I want to start by understanding,
00:24 because the erstwhile HDFC entity did have that product.
00:28 So what exactly new is happening here?
00:31 Yeah, thanks.
00:33 I think what we are trying to do is, in the seven, eight months
00:35 that we've kind of post-merger scenario, on every item,
00:39 we are adding the strengths of HDFC Bank that we had,
00:43 and combining that with HDFC limited strengths.
00:47 So we find that bank had very faster processing times.
00:51 So we're bringing that to the home loan for the customer.
00:54 Parallelly, we are trying to take advantage of the fact
00:57 that we had service centers in HDFC limited, which
00:59 was very smartly--
01:01 would encourage customers to come there
01:03 for the final disbursement checks,
01:05 so that we could have a transparent dealing
01:07 with the customer, and create a customer delight.
01:09 Adding these two strengths, we felt
01:11 that already the home refurbishment that
01:13 was happening, I think we plan to make it
01:16 a straight-through processing.
01:17 So what we've done is, not only on home refurbishment,
01:20 even on regular housing, we worked on the processing
01:23 time for the customers, and got the sanctions times
01:26 reduced to 1/3 of what they were earlier.
01:29 So if you see the total advantage,
01:31 it's on the housing, as well as the home refurbishment,
01:33 as well as the cross-sell.
01:35 So the whole idea is, can we convert a single product
01:39 into a mortgage banking, and create a one-point contract
01:42 for the customer, where our relationship of mortgage
01:45 banking can talk to the customers,
01:47 and various digital journeys available today.
01:50 So whether it's the consumer durable,
01:51 whether it's a credit card, whether it's a home
01:53 refurbishment, and all aspects, we
01:56 can give that convenience to the customer.
01:58 And the customer has an option to decide.
02:01 So it's primarily the processing that is changing here.
02:05 It's probably two to three times faster is our effort.
02:09 And that's what we've so far achieved.
02:11 And we'll constantly try and make it
02:13 as straight-through as possible.
02:15 OK.
02:15 So it's not just this product, but you also
02:17 have another product, as we all spoke about a while back here.
02:21 And both the products are expected
02:23 to be CASA positive, as well.
02:25 So can you quantify that?
02:27 Because primarily, CASA takes a little time to grow.
02:30 Like, when can we expect that showing up in the books?
02:33 I think the good part is that we had around 30%,
02:36 35% of the total disbursements that HDFC Limited and the bank
02:41 was doing before the merger, having a savings account
02:45 and EMI rooted from it.
02:46 That, by December, post-merger, this last December,
02:51 we've reached close to around 80%.
02:53 Which means 8 out of every 10 customers
02:56 have a primary banking relationship with us.
02:58 And I think that's an area which gives you a lot of strengths.
03:02 A, it gives comforts to the bank that his primary transactions
03:06 are happening from the bank.
03:07 His EMI gets rooted.
03:09 He starts keeping more balances with the bank.
03:11 And also, you have greater visibility
03:13 to assess the customer, give him other advantages
03:16 of entire bouquet of products that the bank has.
03:19 So we have digital journeys created for all the retail asset
03:23 products and the CASA.
03:25 So basically, the advantage comes out
03:27 of the fact that housing, which used to pre-merger,
03:31 generate a great book on housing.
03:33 Can we convert that into a liability generating book,
03:37 as well as other asset generating books
03:40 without an increase in operating cost?
03:42 So that becomes probably a game changer with times to come.
03:45 So at an entity level, probably at a monthly level,
03:48 we are already seeing very strong early signs.
03:51 I think with an annualized growth,
03:52 we'll see that as a major strength coming in.
03:55 But you can't quantify it for us for now.
03:58 I think it's fairly robust, and we're excited about it.
04:00 Should probably give you a sense that it
04:02 should be a game changer for the bank in my limited view.
04:06 OK, thanks for that, Clady.
04:07 So I'm going to pick a number here that we all
04:09 spoke about a while back.
04:11 The market share of the bank has grown by 18% to 20%
04:15 on an incremental basis post-merger.
04:17 That's the number that I'm referring to right now.
04:19 So how do you plan to sustain this going forward?
04:22 Because it's an extremely competitive market
04:23 at this point.
04:24 And especially if you look at this quarter,
04:26 there have been considerable pain points as well for banks.
04:29 I think on an incremental business,
04:31 we are noticing trends that all sequentially we
04:36 seem to be growing at a much faster rate.
04:39 If I look at the December quarter,
04:42 sequential growth seems to be clocking in much higher
04:45 than probably the peers on the largest public sector
04:49 or private sector banks.
04:51 Bank's very clear that we want to stand by the quality of asset
04:55 that we take.
04:56 But we do believe the big could get bigger
04:58 in the environment we are in.
05:00 And we can see those early signs.
05:02 So I think we have a large distribution.
05:05 A branch could play a key role.
05:06 Our processing time becomes a cutting edge in the industry
05:10 with the strengths that we've had over years.
05:12 And like I said, coupled with HDFC's strengths
05:15 and a huge amount of talented people
05:18 that are very, very highly skilled at mortgages,
05:21 I think banks probably sitting on a very good poise
05:25 from here on on a monthly level and annualized.
05:28 And how will this renewed focus--
05:30 if renewed is the right word here--
05:32 focus going to impact your margins?
05:36 I think housing, with the kind of balance sheet size
05:40 the bank has, I think housing, I believe,
05:43 could be the most stickier product in terms
05:47 of the longest duration.
05:49 And I think it'll, like I mentioned,
05:50 it'll be hugely asset generative and liability generative.
05:54 So growing housing will create more primary banker customers
05:58 for us.
05:59 It'll be CASA boosting.
06:01 It'll also be other asset boosting.
06:03 So it'll be revenue boosting.
06:05 We'll also be selling these customers options
06:08 or wealth advisory products, HDFC SKYs that we had,
06:11 and encourage customers to use the large bouquet of products
06:15 that we have.
06:16 So we are hoping that this could be a big enabler for growth
06:20 from here on, especially the size we have.
06:22 Because if you look at bank, bank
06:24 has a balance sheet size which probably is one of its kind.
06:27 It's been the largest merger.
06:28 The merger is on a very solid wicket.
06:30 And it's almost 30% of the book.
06:32 So we are excited from here on.
06:35 So growth, OK.
06:38 Margins can improve going here on?
06:40 I think ROAs, in my limited view,
06:43 should be positive as quarter on quarter.
06:47 And with the cross sale and the fee income that we're talking,
06:51 and we are optimistic there.
06:54 Any numbers on the ROA?
06:56 We don't give guidance as a bank.
06:58 You're aware of that.
06:59 So I think we'll stick to the fact that we're excited.
07:01 And we're looking at it positively.
07:02 And I think it's the right way to do business.
07:04 That's important.
07:06 Thanks so much for joining us for this conversation, sir.
07:08 [MUSIC PLAYING]
07:12 (music)