Retail push prompts ICICI Bank, Axis, HDFC Bank to hire more

Even as bad loans continue to rise, a strong retail push has made India’s top three private banks hire more in 2015-16, compared to the previous fiscal, with HDFC Bank taking on its rolls almost two-third more people than ICICI Bank and Axis Bank. The hiring is largely at the branch level in frontline roles, including sales and relationship managers.

About 50% of businesses of these banks is generated through retail.

While ICICI Bank and Axis Bank added 6,000 and 8,000 employees, respectively, HDFC Bank raised its total headcount by 11,269. For the Aditya Puri-led bank, this is a sharp rise against the 8,000 increase last year.

“Our employee strength, partly given the significant expansion in retail lending, resulted in a rise of almost 11,000,” said Paresh Sukthankar, deputy managing director, HDFC Bank. “We have seen two years of strong growth in employee strength.”

According to HDFC Bank’s Annual Report 2014-15, the payments to and provisions for employees were up 13%.

ICICI Bank, the country’s largest private lender, added around 6,239 employees in 2015-16, primarily in frontline roles in the retail and rural banking businesses, taking its total employee strength to 74,096.. In the previous year, this number was reduced by 4,369.

Employee expenses rose 5.3%, compared to the previous fiscal, and excluding provisions for retirement benefits, it was 8%. The average salary hike was around 10% to 15%.

For Axis Bank, the employee base for the year increased 19%, representing 7,905 additions on a net basis to a headcount of 50,135. This is against a decrease of nearly 200 employees in 2014-15 to the staff strength of 42,230.

Though the increase in salaries for 2015-16 was not disclosed, average increase was around 6.16% in the previous fiscal.

“Retail will continue to expand further for banks, especially with the government’s financial inclusion agenda and bringing customers within the ambit of formal channels,” said Kalpesh Mehta, partner, Deloitte Haskins & Sells. “With a return of upwards of 20% and cost of borrowings at about 10-12%, retail is a better growth space... Today even NBFCs want to enter the retail space.”

Also, taking large credit from companies is riskier, mainly due to rising bad loans, while retail, even if unsecured, is relatively better placed in terms of repayments and recovery, Mehta said.