SBI: With a cheaper home loan, SBI wants to give HFCs a chance for their money
Lender PSU took nearly 10 years to bring its mortgage portfolio to Rs 5 lakh crore, but aims to double that amount over the next five years.
“Going forward, home loans will continue to be a major area of focus for us. The home loan portfolio is now the largest portfolio in SBI’s asset base. We aim to increase it to around Rs 7 lakh crore in three years and Rs 10 lakh crore in the next five, ”said Dinesh Khara, chairman of the country’s largest lender in terms of assets.
To do this, the PSU lender aims to take advantage of its low cost of borrowing, which allows it to offer very competitive interest rates. The lender currently offers home loans at an external benchmark rate of 6.65%, the cheapest in the industry.
This helped the bank to take over customers from rival banks and non-bank lenders. Khara said nearly 23% of the Rs 5 lakh crore home loan portfolio included buyout loans.
This is sure to complicate life for real estate finance companies as SBI’s vast network, easy access to the salaried class, and lower cost of funds give it a huge advantage over the competition.
Khara said the younger generation is looking to buy homes much earlier than the trend among previous generations. Almost 42% of SBI’s home loan clients are under 40, he said.
In terms of asset quality in mortgage loans, less than 1% of the SBI portfolio was non-performing while the overall quality of the portfolio remained solid since almost two thirds of clients belonged to the employee class.
Khara said besides home loans, personal loans will be growth engines for the bank going forward. The lender is building its capacity to avoid competition from other large banks and non-bank lenders.
Shares of the State Bank of India traded at Rs 390.40, down 1.1%, on the National Stock Exchange on Wednesday.