Expanding network. HDFC Bank vs ICICI Bank compete in opening of new branches

The country’s two top lenders, HDFC Bank and ICICI Bank, have brought the focus back on brick-and-mortar banking by rapidly adding new branches.

The data on branches of these two for the last three years of these banks, which are known for digital push, reveal an aggressive stance on expanding branch network compared to few years ago. 

HDFC Bank pioneered the move to expand distribution and added 121 branches during Q2 FY23 after opening 36 branches in Q1.

According to Srinivasan Vaidyanathan, CFO, HDFC Bank, about 500 more branches are in various stages in the pipeline to be opened in the next few months.

ICICI Bank is also on the process of expanding its footprint of branches. Though it does not anywhere say that competition from HDFC Bank drove it into action, it has been a regular query from investors and analysts in the earnings calls of last few quarters. 

ICICI Bank added 340 branches in the last year and opened about 200 branches in the first two quarters of FY23.

“This pace of addition is somewhat higher than what we would have done in the preceding years,” Anindya Banerjee, CFO, ICICI Bank said.

Bankers say that branch expansion strategy is determined by assessment of the market opportunity across different markets and micro markets where new economic nodes or new nodes of residential development are coming up and they need to have a physical presence to service. 

“One of the other things that we are also doing as a strategy is trying to move our colleagues closer to the market. So, you would see branch numbers going up over the next couple of quarters as well,” Banerjee added. 

RBI data too capture an increase in bank branches. HDFC Bank branches went up from 5250 in FY20 to 5604 in FY21, while ICICI Bank's branches increased from 5297 to 5239 in the same period. These two account for a bulk of total 34791 private bank branches as on Mxarch 2021. RBI is yet to release complete data for FY22.