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Private banks go slow on growing their corporate loan book
July 24, 2023
Large and mid-sized private banks are going slow on growing their corporate loan book due to lower yields and are focusing on growing their higher yield generating retail loan book more, senior bankers said.
“From a relationship point of view, we want all of these top corporates with us, but from a pricing point of view we have seen some disruption over the last few quarters and so we are not going to bid, we are not going to compete on pricing to win over these loans. We want these relationships, but not necessarily at bargain prices,” said HDFC Bank CFO Srinivasan Vaidyanathan in a post-earnings call.
HDFC Bank’s wholesale loan book grew 11% year-on-year (y-o-y) to ₹4.04 trillion as of June 30, but de-grew sequentially by 1-2%, the CFO said. At the same time, retail advances grew 18% y-o-y and 4% sequentially to ₹6.57 trillion as of June-end. Consequently, while the share of retail loans in overall advances increased to 47% as of June-end from 44% a year ago, that of wholesale loans decreased to 53% from 56% in the same period.
While the trend is not uniform, the rate of growth in corporate loans has fallen for both ICICI Bank and Kotak Mahindra Bank in comparison with overall retail advances growth, according to the banks’ investor presentations.
YES Bank saw its outstanding fund-based corporate loan book falling to ₹49,520 crores as of June 30 from ₹69,948 crores a year ago. Fund-based lending entails granting loans, overdrafts, or other money transfers to a corporate, whereas non-fund-based exposure includes bank guarantees, letters of credit, and bonds. YES Bank chose to grow its non-fund-based corporate book more in Q1 as it rose from ₹50,079 crores during Q1FY23 to ₹55,762 crores in Q1FY24.
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