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Corporate Banks Underperforming Retail-focused Banks
Nov 14, 2018


Corporate banks have underperformed retail-focused banks in the last five years. The chart below shows the annualised returns of the last five years.

Retail-focused banks such as HDFC Bank and Kotak Mahindra bank performed significantly better compared to corporate banks. One of the important reasons for this outperformance is stable asset quality. They could maintain gross NPAs below 1% in the previous five years.

Whereas corporate focused banks such as ICICI Bank, Axis Bank, and SBI are facing serious asset quality issues. Not to mention, some of these banks had management issues as well. No wonder these banks not only underperformed retail-focused banks, but also the BSE Bank index as well.

But as I mentioned earlier, the worst is behind them.

We recommended a corporate bank in Smart Money Secrets.

Its aggressive clean-up of its corporate loan book, hiring the right people at the top, adoption of digital technology, and using algorithms in its core operations, bodes well for the bank and its stock. Smart Money Subscribers can access the report here.

If you do not have access to Smart Money Secrets, you can sign up here...

Data Source: Ace Equity

This Chart Of The Day was published in The 5 Minute WrapUp - A Corporate Bank Stock With 80% Upside

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