Smaller towns driving ICICI's home loans,book crosses Rs 1 tln

The lingering slump in the main realty markets has forced the largest private sector lender ICICI Bank to focus on smaller towns to ramp up its home loan book that has now crossed the Rs 1-trillion-mark.
Executive Director Rajiv Sabharwal told reporters in a concall that the bank has always been serving the tier 2 and 3 towns, but there have been concerted efforts on these markets in the past three years which has paid off so well for the lender that smaller centres now account for 30 per cent of the home loan book.
He said as against a 20 per cent growth in the 11 top cities, home loans in tier-2 and 3 towns are clipping at 30 per cent now, helping the bank's overall mortgage book to grow 25 per cent annually.

Sabharwal, however, admitted that the continuing focus on the smaller towns has resulted in a marginal dip in the average ticket size, which has come down to Rs 35 lakh from a Rs 37 lakh.
The tier-2 and 3 centres which are delivering higher growth include Rajkot, Raipur, Nashik, Agra, Aurangabad etc, Sabharwal said.
The bank is confident of maintaining the overall 25 per cent growth rate in the mortgage book, thanks to its deeper distribution network and the attractive product mix, he said.

According to a July 2015 report by brokerage Knight Frank, a whopping 7 lakh-plus ready-to-move units were unsold in the 8 major metros and it will take over three years to exhaust the inventories. The national capital region accounted for a bulk of it with 1.9 lakh homes.

Overall home sales dropped 19 per cent and new launches by a whopping 40 per cent during January-June 2015 in the top cities of Delhi-NCR, Mumbai, Bengaluru, Pune, Kolkata, Chennai, Hyderabad and Ahmedabad, according to this report.
At present, ICICI Bank's mortgage book accounts for 24
per cent of its total assets and half of the retail book, Sabharwal said, adding that the share of retail loans in the overall asset book has gone one notch up to 45 per cent in the third quarter from 44 per cent in the September quarter.
Acknowledging that there has been a slowdown in the realty sector reflected through the slump in new project launches and rising inventories, Sabharwal said it is not a uniform story across the market.

The bank is focusing on smaller centres, takeovers/balance transfers, he said and stressed that re-sales also offer a good opportunity.
At present, 25-30 per cent of its demand comes from the resale, 50 per cent from under-construction or new flats, while the balance transfers accounts for the rest, he said.
The home loan market, where ICICI Bank lends to women at a minimum of 9.50 per cent and others at 9.55 per cent, is an interesting market to be in, Sabharwal said while elaborating that lower risk weights and the low delinquency levels are a big draw.
The bank today launched a product under which a potential salaried customer can get her home loan approved within eight hours by submitting the necessary documents online.

Apart from it, it also launched a service which helps individuals taking home loans for under construction projects to get subsequent disbursements (after the first disbursement) through the bank's 'iLoans' mobile application, compared to the current practice of visiting a branch.