HDFC Bank , one of India's leading private sector lenders, is experiencing increased pressure in the home loan segment as public sector banks (PSUs) and housing finance companies (HFCs) aggressively reduce interest rates. This shift in the competitive landscape is impacting the growth of private banks in the lucrative home loan market.

Interest Rate Disparity

Public sector banks are now offering significantly lower interest rates on home loans compared to their private counterparts:

This stark difference in interest rates is making PSU banks more attractive to potential homebuyers, potentially affecting the market share of private lenders.

Impact on Private Banks' Performance

The intensified competition is reflected in the recent performance of private banks in the home loan segment:

• HDFC Bank reported a 7.00% year-on-year growth in home loans, but experienced flat sequential growth.
• ICICI Bank's mortgage portfolio growth slowed to 10.30%, down from 14.20% in the previous year.
• Axis Bank saw a year-on-year decline in its home loan portfolio.

HDFC Bank executives have attributed this slowdown to "irrational pricing" by competitors, highlighting the challenges faced by private banks in maintaining their market position.

PSU Banks Gain Ground

In contrast to the private sector's struggles, public sector banks have shown robust growth in their home loan portfolios:

• State Bank of India: 14.00% growth in the home loan book for the full year
• Bank of Baroda: 18.00% growth
• Punjab National Bank: 18.00% growth

These figures underscore the shifting dynamics in the home loan market, with PSU banks outpacing their private sector rivals.

Strategic Shifts

As competition intensifies and margins in the retail loan segment compress, some lenders are reportedly reconsidering their focus. There's a growing trend among certain banks to shift away from low-margin retail loans towards more profitable segments.

The current scenario presents both challenges and opportunities for banks across the sector. While PSU banks are capitalizing on their ability to offer lower rates, private banks may need to reassess their strategies to maintain their competitive edge in the home loan market.

As the situation evolves, it remains to be seen how private banks like HDFC Bank will adapt to these market pressures and whether they can regain their momentum in the home loan segment.

HDFC Bank , one of India's leading private sector banks, has made significant announcements that are set to benefit its shareholders, despite reporting mixed financial results for the first quarter of the fiscal year 2025-26.

Special Interim Dividend

The Board of Directors of HDFC Bank has approved a special interim dividend of Rs 5.00 per share for the financial year 2025-26. Shareholders should note the following key dates:

• Record Date: July 25, 2025
• Payment Date: August 11, 2025

This special dividend comes in addition to the Rs 22.00 per share dividend paid by the bank in June 2025, highlighting the company's commitment to returning value to its shareholders.

First-Ever Bonus Issue

In a historic move, HDFC Bank announced its first-ever bonus issue with a 1:1 share allotment ratio. This means that shareholders will receive one additional share for every share they currently hold, effectively doubling their shareholding without any additional cost.

Q1 Financial Performance

The bank's financial results for the quarter showed a mixed performance:

Despite a slight decline in consolidated net profit, the bank saw significant growth in total income, driven by a substantial increase in other income and a moderate rise in interest income.

Market Response

Following these announcements, HDFC Bank's shares responded positively, trading 1.92% higher at Rs 1,995.00 on the stock exchange.

The combination of a special dividend, bonus issue, and overall growth in income demonstrates HDFC Bank's robust financial position and its focus on enhancing shareholder value, even as it navigates through a challenging economic environment.