HDFC Bank's wholesale book has grown at 27% CAGR in three years

HDFC Bank, the country’s second-largest lender predominantly known for its aggressive retail banking, has grown its wholesale loan book by 2.25 times in past three years.

The wholesale loan book stood at Rs 2.27 trillion in September 2016 vs Rs 4.3 trillion in September this year, a compound annual growth rate (CAGR) of 27.3 per cent.

Rahul Shukla, head of corporate banking at the lender, said: “This growth is significant. Even in the last quarter we had a significant above-trend growth in corporate banking and you have to compare this with the credit growth extension of the economy. We do not see any spikes in the gross non-performing assets and we are witnessing consistent growth in our market share.”

The private sector lender has aggressively grown in the small and medium-sized enterprises (SME) sector, which was driven by semi urban and rural areas essentially fuelled by the extensive branch network of the bank. Among sectors, the bank is seeing demand from cement, fast-moving consumer goods and pharmaceutical sectors while real estate continues to be in pain. 

Rahul Shukla, head, corporate banking at HDFC Bank

On the project finance part of the book, Shukla said, “I will give credit to everybody. We don’t have a separate division for project finance, we divide it in working capital and term loan, and when we have term loan, we have a specialised team which goes out and does the analysis. We have significant term loan exposure which we are comfortable with.” 

The bank has an optimistic outlook on the credit demand from the corporate and SME sector. 

They have done an in-house survey with the CFOs of the large corporate firms which reflects that the general sentiment is neutral to positive for the remaining quarters of this financial year in terms of growth and capex demand.

Shukla said, “Employment in rural areas has improved, wage growth is there and good monsoon has also had a positive impact. Therefore we will see momentum in the coming quarters.”