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HDFC Bank's DIFC branch to target high networth non-resident Indians

August 4, 2014

Babu Das Augustine Banking Editor

Dubai: HDFC Bank, India's second largest private sector bank by assets on Monday opened its branch in Dubai International Financial Center (DIFC).

The new branch with a Category IV licence will initially offer wealth management services including advisory services on treasury products, structured products, trade finance and loans to high networth non-resident Indians (NRIs)

The bank currently has representative offices in Dubai and Abu Dhabi and has a significant share of NRI business with a NRI deposit base of $10 billion.

"Nearly 40 per cent of our NRI deposits come from the UAE and about 65 per cent of this comes from Dubai. With the opening of the DIFC office we expect to enhance our reach to high networth NRIs," said Abhay Aima, Group Head Equities, Private Banking.

The bank's international book size exceeded $5 billion last year, about 7 per cent of its total book size. The foreign currency non-resident (FCNR) deposits accounted for $3.5 billion last year, 13 per cent to the total FCNR bank deposit inflows into India last year.

HDFC Bank officials said yesterday that the bank is keen on expanding its international book size through its DIFC office.

"The bank is offering a wide range of products for corporates and small and medium enterprises (SMEs) through its Bahrain and Hong Kong branches. With the setting up of DIFC branch the distribution of such products to Gulf clients will be easier," said Ashish Parthasarathy, Group Head of Treasury, HDFC Bank.

Senior executives of HDFC Bank said, the bank is looking at lending opportunities in the UAE and the region and could eventually upgrade its DIFC licence. "We are conservative in our approach to international expansion. We will closely look at the local and regional opportunities," said Aima.

The Mumbai-based bank's net profit rose 21 per cent to 22.33 billion rupees ($371 million) for the fiscal first quarter to end-June from 18.44 billion rupees a year earlier.

HDFC Bank, which had outperformed rivals with consistently high profit growth of about 30 per cent and stable asset quality, has seen profit growth weaken in the past quarters. Provisions for the June quarter increased to 4.83 billion rupees from 2.86 billion rupees in the previous quarter.

Weak economic expansion has squeezed credit growth for Indian lenders, slowing their earnings growth in recent quarters. The sector is betting on a revival in economic activity and a gross domestic product growth of more than 5 per cent after a new government led by Prime Minister Narendra Modi took power in May. Last year India's banking sector reported a modest credit growth of about 13 per cent. HDFC Bank expects its credit expansion to be close to 20 per cent this year.

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Source: Gulf News (United Arab Emirates)

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