HDFC Bank plans to open 1,500-2,000 new branches over the next 5 years

22 Jun 2022 , 08:38 AM

According to HDFC Bank’s managing director and CEO Sashidhar Jagdishan, the bank plans to quadruple its branch network in the next three to five years by adding 1,500 to 2,000 branches each year, which would be equivalent to opening a new HDFC Bank every five years.

In his letter to shareholders in the annual report 2021-22, Jagdishan outlined the reasons for HDFC’s merger with HDFC Bank, saying: “The proposed combination gives the future a completely new dimension. We feel that the runway is vast and that an HDFC Bank may be added every five years.”

The Housing Development Finance Corporation (HDFC) and its subsidiary HDFC Bank announced a transformational merger in early April of this year, which is scheduled to be completed in 15 to 18 months. The bank is looking forward to the outstanding set of talent, deep product knowledge and expertise, processes, and systems that the lender will bring to the existing ones, according to Jagdishan, who dubbed the merger the ‘Power of One.’

HDFC Bank cannot afford to lose out on this chance, according to the CEO, who added that house loans are emotional products that provide the bank with a slew of expedited benefits. “Today’s home-buying atmosphere is different. RERA has guaranteed that the process is more transparent. Inventories have decreased as a result of price corrections in the real estate market. In addition, higher incomes have resulted in lower home loan EMIs as a percentage of a person’s income,” the official added.

He claims that as telecommunications, internet, and television services become more widely available, the desire to possess better homes has grown across the country. “All of this indicates that housing will be a big development potential and one of India’s key drivers of GDP in the next 10 years.”

He cited additional favourable considerations in justifying the timing of the merger, stating the narrowing of the regulatory arbitrage between banks and NBFCs over the last few years, with reserve requirements falling to roughly 22% from 26%.

In terms of capital raising plans, the lender stated that it intends to raise a maximum of Rs50,000 crore through the private issue of long-term bonds. The fundraising plan will be approved by shareholders at the next annual general meeting, which is scheduled for July 16, 2022.

HDFC Bank’s net profit increased over 19% to Rs36,961 crore in the fiscal year ended March 2022. The company’s balance sheet increased by 18.4% to Rs20,68,535 crore. As of March 31, 2022, the bank’s gross non-performing assets accounted for 1.17% of its gross advances.