Mumbai: Real estate has emerged as the single largest sectoral exposure on HDFC Bank’s balance sheet, accounting for 34 per cent of its total advances book, according to the bank’s FY26 annual report. The exposure has crossed Rs 10 lakh crore, reflecting the growing importance of housing and real estate lending following the merger of HDFC Bank with its parent, HDFC Ltd, in July 2023.

The figures underline how the merger has significantly expanded the bank’s footprint in the housing finance segment, making real estate the most concentrated sector in its lending portfolio.

Real estate accounts for one-third of advances

HDFC Bank’s total advances book stood at Rs 29.37 lakh crore in FY26. Of this, exposure to the real estate sector exceeded Rs 10 lakh crore, representing approximately 34 per cent of the overall loan portfolio.

The exposure includes residential mortgages, commercial real estate financing and indirect exposure through housing finance institutions.

Banking analysts note that the figure represents sectoral exposure rather than only outstanding disbursed loans, offering a broader picture of the bank’s lending commitment and risk appetite towards the real estate sector.

Residential mortgages dominate portfolio

The largest component of the real estate exposure is the residential mortgage business.

According to the annual report, residential home loans account for Rs 7.39 lakh crore of the total real estate exposure.

Commercial real estate lending contributes another Rs 2.12 lakh crore, while indirect exposure through the National Housing Bank (NHB) and housing finance companies stands at approximately Rs 50,844 crore.

The exposure figure also includes sanctioned but undrawn credit facilities, meaning the actual disbursed loan book is lower than the reported sectoral exposure.

However, financial experts say the exposure data provides a clearer picture of the bank’s overall commitment to the sector.

Exposure rises by over Rs 77,000 crore

HDFC Bank’s exposure to the real estate sector increased substantially during the past financial year.

The bank’s total real estate exposure stood at Rs 9.25 lakh crore in FY25. During FY26, the figure rose by Rs 77,479 crore, crossing the Rs 10 lakh crore mark.

One of the strongest growth segments was priority sector housing finance.

Loans under this category grew by 51 per cent year-on-year, rising from Rs 1.38 lakh crore in FY25 to Rs 2.08 lakh crore in FY26.

The increase has largely been attributed to stronger mortgage origination volumes following the HDFC Ltd merger.

Commercial real estate lending expands

Commercial real estate financing also recorded healthy growth during the year.

The bank added Rs 23,458 crore in commercial real estate exposure during FY26, representing an increase of 12.4 per cent compared to the previous year.

Industry observers attribute the growth to continued demand in segments such as office spaces, warehousing and logistics infrastructure, which have remained relatively resilient despite fluctuations in the broader property market.

Exposure spread across business segments

The concentration in real estate does not appear separately in HDFC Bank’s business segment reporting.

The bank reports its operations under four major segments:

  • Retail Banking
  • Wholesale Banking
  • Treasury
  • Other Banking Business

A residential home loan is recorded under retail banking, while construction finance is categorised under wholesale banking. Credit facilities extended to housing finance companies may be reflected under other segments.

Despite being distributed across different reporting categories, all these exposures contribute to the bank’s overall real estate exposure of more than Rs 10 lakh crore.

Asset quality remains strong

Despite the sizeable concentration in the sector, HDFC Bank’s asset quality remained robust during FY26.

The bank reported a gross non-performing asset (GNPA) ratio of 1.15 per cent, one of the lowest levels in recent years.

Mortgage loan performance remained stable throughout the financial year, supported by resilient property prices and sustained demand across key real estate segments.

Commercial real estate activity, particularly in the office and warehousing sectors, continued to witness healthy demand, helping maintain credit quality.

Notably, the bank’s management did not identify real estate concentration as a major risk factor in its annual report.

Merger continues to reshape loan portfolio

The integration of HDFC Ltd’s mortgage business into HDFC Bank has significantly reshaped the bank’s lending profile since the merger in July 2023.

With real estate exposure now exceeding Rs 10 lakh crore, housing finance remains a key growth driver for the country’s largest private-sector lender. While the concentration highlights the bank’s strong presence in the sector, its low bad-loan ratio and stable mortgage performance indicate that asset quality remains under control.