Axis Bank is looking to boost the share of retail loans in its portfolio to 30% by 2015 from 22% at the end of financial year 2012-13. Pointing out that there could be credit risks associated with some new areas, Jairam Sridharan, head of Consumer Lending and Payments, said the bank planned to run some pilots. ?As of now our retail credit business remains robust though there are early signs of stress in segments like small ticket housing loans,? he added.
Launching new products is key to catching up with larger rivals like HDFC Bank and ICICI Bank which have a larger share of retail loans, at 55% and 36% of their respective loan books. ?The industry has many more retail products which we hope to offer,? Sridharan said.
Axis Bank’s retail loan book size stands at R40,500 crore and has been averaging a 30% CAGR growth since 2009-10. ?In the medium term, we expect the market to grow at 20% and it?s possible that we grow 30%,? said Sridharan, adding that demand for loans in this space remain strong with factors such as inflation ? adjusted income and unemployment not having deteriorated significantly as yet.
To strengthen its retail loan book, the bank has opened over 830 branches in last three years, many of which are in smaller towns. Currently, the bank sources retail loans from 850 of its 1,500 branches. Indian retail credit penetration is among the lowest in the world and declined from 10.9% of GDP in March 2007 to 8.3% in December 2011.
Home, auto loans and credit cards currently constitute around 90% of Axis Bank’s retail portfolio. The banks hopes to launch products like include loan against property, commercial vehicle loans, personal loans, gold loans, and small business loans. Analysts points out that the bank?s focus on retail credit arises from growth constraints in corporate advances and higher profitability in retail credit. Sridharan said that the bank sees an opportunity in gold loans adding that the bank continued to innovate with existing products. It recently launched the ?Happy Ending Home Loan?, where loyal customers are rewarded with the waiver of their last 12 EMIs.
Also, though Axis Bank is not on an aggressive lateral hiring spree like new generation banks such as Yes Bank, it has recently brought in senior executives from foreign banks to strengthen the retail team.In the last 9-12 months it has recruited people from organisations like Barclays, CapitalOne, HSBC at the mid-management to senior level.
