HDFC Bank Parks 34% Of Advances In Real Estate, FY26 Report Shows

HDFC Bank’s merger with HDFC Ltd. in July 2023 has led to a sharp increase in the bank's exposure to the housing finance segment. According to the bank's FY26 annual report, total exposure to the real estate sector now exceeds ₹10 lakh crore.

That represents about one-third of the bank's advances book, which stood at ₹29.37 lakh crore at the end of FY26.

The figure includes outstanding loans as well as sanctioned but undrawn credit lines, giving a broader view of the bank's approved exposure to the sector.

Which Loans Drive HDFC Bank's Real Estate Book?

Residential mortgages alone stood at ₹7.39 lakh crore at the end of FY26. That makes home loans the biggest contributor to HDFC Bank's total real estate exposure, which has now crossed ₹10 lakh crore.

The bank also had ₹2.12 lakh crore of exposure to commercial real estate. Another ₹50,843.77 crore came through lending to the National Housing Bank and housing finance companies, taking the combined real estate exposure beyond ₹10 lakh crore.

Together, these exposures pushed the overall real estate book beyond the ₹10 lakh crore mark.

Unlike the bank's financial reporting segments, this exposure is spread across different businesses. Home loans are reported under retail banking; construction finance forms part of wholesale banking, while lending to housing finance companies appears under separate categories. Even so, all of them contribute to the bank's overall real estate exposure.

Where Did The Growth Come From?

The bank's exposure to real estate increased by ₹77,479 crore during FY26. A large part of the expansion came from housing finance.

Priority sector housing loans rose 51% year-on-year, climbing from ₹1.38 lakh crore in FY25 to ₹2.08 lakh crore in FY26. The annual report attributes this increase to higher loan origination following the merger.

Commercial real estate exposure also moved higher during the year, rising by ₹23,458 crore, or 12.4%, in FY26. The bank cited steady demand in office and warehousing assets as one of the factors behind the increase.

At the end of FY25, the bank's total real estate exposure stood at ₹9.25 lakh crore.

Does The Concentration Raise Any Risk Concerns?

The size of the exposure has made real estate the single largest sector on HDFC Bank's balance sheet.

However, the FY26 annual report does not identify the concentration as a key risk.

Asset quality also remained stable during the year. Gross non-performing assets stood at 1.15%, one of the lowest levels reported by the bank in decades.

The annual report notes that property prices remained firm, while demand in commercial real estate, particularly office and warehousing, continued to hold up.

Although the ₹10 lakh crore figure includes undrawn credit lines and therefore exceeds the disbursed loan book, it reflects the scale of HDFC Bank's approved lending exposure to the real estate sector after the merger with HDFC Ltd.

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