Both banks are on an aggressive digital transformation, with ICICI Bank taking the initial lead.
We expect both the banks to take advantage of the digitization of banking, having similar growth and profitability profiles (with a slight edge to HDFC Bank).
- HDFC Bank trades at an increased P/BV than ICICI Bank primarily because the market is giving higher value to HDFC Bank’s consistent performance.
- HDFC Bank in addition has invested in Bengaluru based wealth management tech platform Smallcase.
- So, understand the difference between HDFC ERGO and ICICI Lombard health insurance before you buy a plan.
- Return on equity (ROE) tells an investor how much profit a company generates on shareholders capital.
This shows in the overall growth history of over 225 percent CAGR over four years.
What’s also commendable is that Interest Income as a percentage of Total Assets has been steadily rising.
Historically many of the best-performing bank investments have already been people with proven with the capacity of above-average revenue growth.
Another way to make use of this data is to understand how risky the borrower profile is and how much return the bank is earning for the risk taken.
In social media marketing and amongst the public in general, ICICI Bank appears to be the better digitally prepared bank.
To our mind, the general perception is founded on mobile app UI/UX
Icicidirect Vs Hdfc Securities Transaction Charges
The five year average of HDFC Bank’s NPAs is approximately 0.4% that is the lowest in the industry.
It means that if HDFC Bank disburses a total loan of Rs 100 then Rs 0.4 doesn’t come back to the bank.
ICICI Bank with its iMobile Pay app seems clearly superior to HDFC Bank at this point.
From the merchant perspective, both HDFC Bank’s SmartHub and ICICI Bank’s InstaBiz appear to have similar offerings.
Over a five-year period, this number has changed materially for the top three lenders in the united kingdom but slid in the case of the fourth.
Regarding percentage, Kotak Mahindra has seen the sharpest jump with its workforce rising around 86% within the last four years.
HDFC Bank was the flag bearer, followed by Kotak Mahindra Bank and ICICI on the list of top private lenders.
Icici Bank Vs Hdfc Bank: Every Lender Has Its Year – Bq Prime
So much so, that bad loans were estimated at over 11% of the total money advanced by banks in the country as of March 2018.
Financial services at large and the banking sector in particular are considered the backbone of any economy.
The Indian banking sector—which has a diverse mix of actors, including large state-owned legacy banks, fast-growing local private banks and a few international banks—has been facing challenges of its own.
- However, since the management of ICICI Bank was overhauled with Sanjay Bakshi taking charge, there has been a drastic improvement in the bank’s performance.
- HDFC Bank’s higher interest income has translated into higher NIM for the bank.
- partnership with PayTM will probably be of significant help in this aspect.
- Just last month, New Delhi-based developer DLF Ltd. sold $1 billion worth of million-dollar homes on the outskirts of the national capital in 72 hours.
- An organization may pay a dividend when it generally does not have any immediate expenses to pay for.
With our collaborative approach, you can maintain control over your investments while benefiting from our expertise and guidance.
Another simple measure to watch is net interest margin, which looks at net interest income as a share of average earning assets.
The efficiency ratio, or cost to income ratio, measures non-interest expenses, or operating costs, as a percentage of income.
HDFC Bank is in charge of collecting almost 1/4th of tax in the country.
That is again a way to obtain zero-cost deposits, which helps in lowering the price of funds.
Moreover, with an increase of formalisation and digitisation, this number is only going to increase.
ICICI Bank, which has been cleaning its books after the alleged corporate governance lapse that took the scalp of its former CEO Chanda Kochhar, has seen good and the bad.
It was the outlier in the pack, having seen its profit per employee sink by half during FY19.
As contrary to the top two private lenders, HDFC Bank and ICICI Bank, who’ve increased their business per employee by
Return on assets (ROA) tells an investor just how much profit a company generates on total assets the business owns.
Now, let’s take a look at another side of the equation that is concerned with loans.
Banks use their deposits to disburse loans or advances as they call it in banking parlance.
The growth of advances should keep up with the growth of a bank’s deposits.
There are several types of deposits that contribute to the entire deposit base of a bank.
Physical branches are still a preferred mode of accessing basic banking services especially in rural areas.
Dividend is company’s accrued profits distributed equally among shareholders.
A company may pay a dividend when it generally does not have any immediate expenses to pay for.
HDFC Bank’s net profits have become at a CAGR of 15.9% over the last five years.
An example of the latter would be of Covid-19 pandemic which severely affected the business enterprise landscape.
Other private banks like HDFC Bank (HDB) and Axis Bank have maintained an extremely decent growth rate more than 40%.
However that growth has come at the cost of rising NPAs and declining margins and profitability.
From the discussion above, it ought to be evident that for banks, the most crucial parameters would be sustainable profitability (factor of profitability and asset quality) first and growth next.
HDFC Bank is the market leader in the Merchant acquiring business with around 45-50% value share.