HDFC Bank to up corporate exposure

HDFC Bank wants to grow its corporate portfolio by 30 per cent in 2004-05 against 15 per cent in the previous year on the back of huge capital expenditure plans of corporates.

The bank's customer assets have been growing at a rate of 25 to 30 per cent. The bank will need to raise capital over the next six to 12 months to support this growth and maintain the capital adequacy ratio, said Paresh Sukthankar, head credit and market risk. The market to access, size of the issue, and the timing are undecided, he added.

HDFC Bank has never been involved in greenfield project finance. However, if the bank's existing customers have capex plans the bank would be willing to look at such resources, said Sukthankar. Traditionally, the bank has focused on working capital funding, supply chain management, treasury products, trade finance and cash management, he added.

In the last six to nine months, the bank has seen an increase in demand for working capital requirements. However, the demand has not been adequate enough to push up interest rates, said Sukthankar.

About 20 per cent of the banks' top tier corporate clients are looking at expansion in the next 12 to 16 months, he added.In the past two months, the bank has financed 20 to 25 business proposals, said Samir Bhatia, country head corporate banking.

Credit demand has picked up in steel, paper, automobiles, engineering petrochemicals and telecom, he added.

"It's easy for any bank to grow its corporate portfolio at 60 to 70 per cent. However, we have been very selective in choosing the right customers and has also been stringent on return on equity and interest margins," said Bhatia.

The bank plans to grow its portfolio by adding new customers with geography and through introduction of new structures and products, said Sukthankar. Of the banks total book, 60 per cent account for corporates and 40 per cent retail.