Deutsche Bank, a relatively new entrant in retail banking, is expecting a 25 per cent growth in retail loan portfolio this financial year as it increases focus on mortgage lending.
Over the next five years, the bank expects retail banking to account for 15 per cent of the business as against 7-8 per cent at present.
The bank’s retail banking business includes deposits, wealth management, mortgages and unsecured lending, which comprises personal loans and credit cards, and has been growing 25-30 per cent annually. Of this, mortgages account for 50 per cent lending while the rest is unsecured loans — divided equally between cards and personal loans.
“We are growing unsecured lending cautiously. In unsecured lending, our growth last year was muted at 5 per cent, while we grew about 30 per cent in secured lending. Retail banking accounts for more than 7-8 per cent of the total business. In the next five years, it should account for 15 per cent. Right now, there is more demand for mortgages than for personal loans,” said Prashant Joshi, managing director and head, private banking, Deutsche Bank.
The statement comes at a time when foreign banks in India are seeing little or no growth in their loan book. In the year to August, the latest period for which data are available, foreign banks shrunk their loan portfolios as their parents grappled with the global financial crisis and due to fear of higher defaults in India.
While the mortgage lending segment is expected to grow 30-40 per cent, in personal loans and credit cards, the bank is expecting a segment shift as it plans to launch new variants of Platinum cards in the next two months.
“We will focus on Platinum cards more than Gold or Classic cards. In personal loans, preference will be given to salaried people. A lot of customers are consolidating their cards. Right now, our focus is on the premium Platinum card segment. But then, most banks are focusing on premium credit cards, so it is important to keep coming out with variants. We plan to launch some Platinum card variants in the next two months,” he said.
In the home loan segment, the bank has seen a pick-up in demand in the last six months. “In the last six months, there has been a rise in demand for home loans. Residential property transactions have increased 30-40 per cent in the last six months. Our exposure to mortgages has gone up by 7-8 per cent in one quarter. So, on an annualised basis, it should go up by 30-40 per cent. But I do not see demand growing significantly from the present levels. It should stabilise at the present level,” said Joshi.
The bank has about 13 branches across India, covering all major cities.
It recently got a license to open branches in Ludhiana and Moradabad.
“Small cities makes a lot of sense as there is a lot of growth in there. The regulator also wants us to go there,” said Joshi.
