- Banking
- 2 min read
Going by the year-on-year growth rate in total advances of 8.47 per cent for SBI and 16.5 per cent for HDFC Bank, the latter could trump SBI in market share in 3-5 years.
- Updated On Apr 12, 2022 at 08:24 AM IST
Read by: 100 Industry Professionals
Read by 100 Industry Professionals
Public sector banks are set to face higher competitive intensity after the merger of HDFC with HDFC Bank
The merger may lead to consolidation and competition among the private players as they see benefits accruing to the country's largest private sector bank.
The merger will also narrow the gap between State Bank of India (SBI), the largest lender and HDFC Bank, while also increasing the gap between HDFC Bank and its private sector peers.
Narrowing gap
As of December-end 2021, SBI had a loan book of Rs 26,64,602 crore while it was R 12,68,863 crore for HDFC Bank, respectively, with the gap between them being Rs 13,95,739 crore.
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However, with the merger of HDFC’s loan book of Rs 5,25,806 crore with that of HDFC Bank, the gap between SBI and HDFC Bank reduces to Rs 8,77,933 crore.
Going by the year-on-year growth rate in total advances of 8.47 per cent for SBI and 16.5 per cent for HDFC Bank, the latter could trump SBI in market share in 3-5 years.
Ceding ground to private-sector rivals
The market share of public sector banks in loans declined to around 59 per cent (of all scheduled commercial banks’ outstanding credit) in December 2020 against around 65 per cent in December 2017.
However, during this period, the private sector market share rose to around 36 per cent from around 30 per cent, according to the Reserve Bank of India data.
The domestic corporate loans by the State Bank of India fell 2.23 per cent to Rs 7,90,494 crore in the quarter ended June 30, 2021, compared to Rs 8,09,322 crore in the same quarter last year. In the first quarter of FY21, SBI reported 3.41 per cent growth in corporate advances.
Union Bank of India's share of industry exposure in domestic advances dropped to 38.12 per cent at Rs 2,40,237 crore from 39.4 per cent at Rs 2,47,986 crore in the same quarter a year ago. Corporate loans dropped 3% at Indian Bank during the last quarter. At PNB, corporate loans fell 0.57 per cent at Rs 3,264,66 crore in June quarter 2021 compared to Rs 3,28,350 crore a year ago.
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The PSB market share is also shrinking as no new PSBs have come up while the number of private sector banks continues to grow.
SBI's plans
State Bank of India is also looking to grow aggressively, especially its home loan book, to stay ahead of rivals. In a communication to staff, SBI Chairman Dinesh Khara said, “With the economic prospects looking brighter, we now also need to consciously focus on improving the bank’s market share. “Therefore, we have to grow faster than our competitors, bring efficiencies in the organisation and deliver consistent profitable performance,” said Khara.
- Published On Apr 12, 2022 at 08:24 AM IST
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