HDFC Bank will add 1,500-2,000 branches every year for 5 years


New Delhi: HDFC Bank Its managing director and CEO Shashidhar Jagdish said it is proposed to double its branch network in the next three to five years by adding 1,500 to 2,000 branches annually, which would be equivalent to adding a new HDFC Bank every five years.
Outlining his support for HDFC’s merger with HDFC Bank in his letter to shareholders in the 2021-22 annual report, Jagdish said: “The proposed merger will add a completely different dimension to the future. Add HDFC Bank every five years. ”
He further said that the bank is proposing to double its branch network in the next three to five years by opening 1,500 to 2,000 branches every year. It currently has over 6,000 branches across India.
“The density of branches for the population of this country is much lower than that of OECD countries. This is where our branch banking strategy comes in. Today we have over 6,000 branches across India, and we plan to almost double our network in the near future. Three to five years by opening 1,500 to 2,000 branches a year, ”he said.
Earlier in April this year, Housing Development Finance Corporation (HDFC) and its subsidiary HDFC Bank announced a transformative merger, which is expected to be completed in about 15 to 18 months.
Calling the merger a ‘power of one’, Jagdish said the bank awaits an exceptional pool of talent, in-depth product knowledge and skills, processes and systems that lenders will add to the present.
HDFC Bank cannot miss this opportunity, Jagdish added, adding that home loans are emotional products and bring with them many quick benefits for the bank.
“The environment for buying a home has changed today. RERA has ensured greater transparency in the process. The property market has seen a decline in inventories due to price improvements. In addition, rising incomes mean that home loan EMIs have fallen as a percentage of per capita income,” the official said. Said.
He said with the advent of telecom, internet and television services, the desire to own better homes has increased across the country.
“All this means that housing is going to be a huge growth opportunity and one of the major drivers of India’s GDP in the next decade.”
Presenting the figures, Jagdish said only 2 per cent of its customers get home loans from them, while 5 per cent do so from other institutions. “The latter is equivalent to the size of our retail book. Home loan customers typically have 5 to 7 times more deposits than other retail customers. And about 70 per cent of HDFC Ltd customers do not bank with us.”
All this gives HDFC Bank an idea of ​​the size of the opportunity, he added, adding that the long-term nature of the home loan provides flexibility to the balance sheet. The bank is one of the largest consumer durable financiers in the country.
“We can easily bundle this with a home loan, as with every home loan, the customer has a tendency to take new consumer durables. This type of bundling will increase the margin. We must seize this opportunity, “he said.
Citing the timing of the merger, he said there were other favorable factors, such as narrowing the regulatory arbitrage between banks and NBFCs over the past few years, reducing reserve requirements from 26 per cent to about 22 per cent.
“Both institutions are well-capitalized and have a strong portfolio of investments in surplus liquidity and government securities. The increase in priority sector lending that we need to do, due to the merger, is now possible with our own growing focus on MSMEs. Can and well developed PSL certificate market.
“All of this means that there will be no need to raise more funds to meet reserve needs on the day of the merger. Adding a home mortgage portfolio to our balance sheet makes it more diverse and robust.”
In addition, the bank’s increased capital position after the merger also means that lenders can take greater exposure to leading corporates and empower the country’s infrastructure, Jagdish said.
He said HDFC Bank already has a huge opportunity with the penetration of banking services in the country. “The proposed merger adds a completely different dimension to the future.”
On the plan to raise capital, the lender said it would issue long-term bonds of Rs. Proposes to raise more than Rs 50,000 crore.
It will seek shareholders’ approval at its next annual general meeting scheduled for July 16, 2022, to raise funds.
In the financial year ended March 2022, HDFC Bank raised Rs. Net profit of Rs 36,961 crore grew by about 19 per cent. Its balance sheet rose 18.4 per cent to Rs. 20,68,535 crore.
On the asset quality front, the bank’s gross non-performing assets as of March 31, 2022 were 1.17% of total advances.

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