HDFC & ICICI banks go slow on retail loans

MUMBAI: The country’s largest and second-largest private banks, HDFC Bank and ICICI Bank, continued to be cautious in expanding their personal loan books in Q2, particularly in the unsecured segment.

HDFC Bank’s retail loans rose 7.4% year-on-year and 2.2% quarter-on-quarter to Rs 15,55,400 crore, MD & CEO Sashidhar Jagdishan said in the earnings call. He emphasised that the bank will maintain its underwriting discipline, saying it “will not dilute our credit standards for underwriting” or “dilute any credit standards” to capture unsecured loan market share.

On credit cards, HDFC Bank remained careful, “circumspect on increasing credit lines for revolvers”, and restricted certain spend categories, deliberately avoiding large e-commerce spends during the festive season.

In home loans, the management said the bank chose “not to go down the interest rate ladder” despite competitive pricing, following its principle of not chasing market share at the cost of returns.

ICICI Bank’s retail loans, which account for 52.1% of the total book, grew 6.6% year-on-year and 2.6% quarter-on-quarter to Rs 739,384 crore.

Mortgages, forming 62% of retail loans, rose 9.9%, while personal loans fell 0.7%, credit card outstandings increased 6.4%, and loans against shares declined 11%. Management said the bank focuses on risk-calibrated, profitable, and sustainable growth, and that corrective actions in unsecured segments between 2020 and 2023 have strengthened portfolio performance, allowing measured disbursements. The retail portfolio, including non-fund-based loans, now represents 42.9% of the total. Sequential growth in Q2 has “picked up” across retail segments, and the bank remains “positive on the growth outlook”.