HDFC Bank to raise $1bn

Lender will offload medium-term notes, set up Bahrain branch.

HDFC Bank Ltd, India's third-largest bank by market value, plans to sell as much as $1 billion of medium-term notes to finance its expansion overseas, said Sudhir Joshi, the bank's treasurer.

HDFC aims to open its first branch abroad, in Bahrain, within a few months, Joshi said in a telephone interview from Mumbai today. The bank also plans to open new offices in London and Hong Kong, the company said.

HDFC Bank joins rivals such as ICICI Bank and Bank of Baroda in expanding overseas to track local companies including Tata Steel, Hindalco Industries and Indian Hotels, which are acquiring foreign competitors. 
 

ON A ROLL A glance at the bank's parameters
Rs crore	2003-04	2004-05	2005-06	2006-07
Deposits	30,409	36,354	55,797	68,298
Advances	17,745	25,566	35,061	46,945
Interest received	2,549	3,093	4,475	6,889
Total assets	42,307	51,429	73,506	91,236
Interest paid	1,211	1,316	1,930	31,79
Net profit	510	666	871	1,141
Gross NPAs	336	439	509	658
Net NPAs	28	61	155	203
CAR (%)	11.66	12.16	11.41	13.08

"As more local companies grow overseas and acquisitions rise, it makes sense for Indian banks to have a global presence," said Navneet Munot, an executive director at Morgan Stanley Investment Management in Mumbai.

"Also, capital markets are getting integrated," and businesses owned by Indians living overseas are increasing, Munot added.

Standard & Poor's today gave a BBB- rating, its lowest investment grade, to the senior debt portion of the proposed notes. It assigned BB+, the highest non-investment grade rating, to the lower tier-2 subordinated debt and rated the upper tier-2 and hybrid tier-1 notes a step lower at BB. The bank hasn't set the final structure of the debt, Joshi said.

ICICI Bank, the nation's biggest, expects its overseas business to grow by a third in the next two years. The bank helped facilitate 11 overseas acquisition deals last year, according to data compiled by Bloomberg. The bank borrowed $10 billion overseas last year to fund clients' overseas investment and acquisitions.

HDFC Bank's 754 branches issued about half its Rs 71,400 crore ($17.8 billion) of outstanding loans to individual borrowers as of December 2007. The bank routes home mortgage loans on behalf of its promoter, Housing Development Finance Corporation, which owns a fifth of the commercial lender.