SBI, ICICI Bank, HDFC reporting 17-25% growth as customer profile grows younger, hinterland throws more investment opportunities; ICICI crosses Rs 1 lakh crore in home loans
Small towns are fuelling home loan growth in India, with top three home financiers -- State Bank of India (SBI), ICICI Bank and HDFC -- reporting high double-digit growth in the segment.
While the bank credit growth is on a decline, home loans are growing 17% to 25% over the previous year. Bankers say home loan customers are getting younger and smaller towns are throwing up opportunities to invest in good properties.
While the pace of growth is the highest for ICICI Bank, both HDFC and SBI are also reporting good numbers.
Keki Mistry, chief executive officer and vice-chairman, HDFC, told dna, "The robust growth in home loans are coming from Tier II and III cities. Our portfolio is growing at the rate of 23% over the previous year."
While SBI's portfolio is likely to be close to Rs 2 lakh crore, growing at the rate of 17%, ICICI Bank, the largest private sector bank, will clock a little over Rs 1 lakh crore growing at 25% year on year at the end of December.
HDFC's total book was around Rs 1.65 lakh crore by the end of the second quarter.
Rajiv Sabharwal, executive director, ICICI Bank, said in a concall on Thursday, "We are reporting a 25% growth over the previous year and seeing the demand from Tier II and III cities. About 50% of the home loan portfolio is of under-construction projects while about 30% is from resale properties. We are focusing on resale properties."
A senior SBI official said, "Migrating population is increasing demand in cities and towns where their jobs take them. The profile of the home loan customer is getting younger and developers are branching out into a wider number of towns expanding the market, exploiting the latent demand that was there but until now untapped." The bank's number of sanctions in the third quarter ended December 31, 2015 stood at 74,000.
ICICI Bank on Thursday said that it crossed Rs 1 lakh crore in the first week of December and by the time the bank announces its results later this month, it would have grown further. This also does not include the home loans booked under its home finance company, ICICI Home Finance, which had a loan outstanding of Rs 7000 crore at the end of September 30, 2015.
ICICI Bank has also launched two new digital initiatives to simplify and quicken the assessment for new home loans. First is a Express Home Loans where the bank will approve home loan applications in eight hours for salaried employees where customers can get an approval by uploading the Know Your Customer requirements like the address proof and PAN card details and income statement. The second initiative helps individuals taking home loans for under construction projects to get subsequent disbursements (after the first disbursement) through the bank's 'iLoans' mobile application.
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