HDFC Bank & ICICI Bank – New kids on the block - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

HDFC Bank & ICICI Bank – New kids on the block

May 27, 2000

Private sector banks in India are gearing up to provide one stop financial solutions to their customers with speed and quality being the guiding forces. The key drivers of their success has been the relentless pursuit of excellence through innovation, sound management practices and the rapid application of new technology to meet the ever growing competitive challenges in the sector. HDFC Bank and ICICI Bank are the two leading privates sector banks which have been successful in providing the technology enabled financial solutions to retail customers, corporates, small scale industries and agricultural sector for their banking requirement. HDFC Bank is the first Indian bank to launch a payment gateway solution for use in its B2C Internet transactions. Its technologically superior branch networks (115 automated branches) and high quality services backed by HDFC's reputation give it an advantage over other private sector banks.

ICICI Bank, promoted by India’s largest housing finance company ICICI, is the first in the Indian banking industry to start Internet banking. It is also the first Indian commercial bank to list on NYSE (New York Stock Exchange). The new ADR issue has enabled the bank to increase its capital adequacy ratio to 19.6% from 11.1% in FY1999. The bank’s Internet accounts increased exponentially to 110,000 from 4,000 in the previous year.

Comparative financial performance
Particulars HDFC Bank ICICI Bank
Interest income (Rs bn) 6.8 8.5
Growth 80.8% 56.8%
Net profit (Rs bn) 1.2 1.1
Growth 45.6% 66.2%
Operating profit margins 44.9% 21.8%
Net profit margins 17.7% 12.3%
CAR 12.2% 19.6%
NPAs 0.8% 1.1%
EPS (Rs) 5.9 5.4

HDFC Bank enjoys comparatively higher valuation than ICICI Bank. One reason for the mismatch in valuation is the difference in their financial performance and asset quality. HDFC Bank enjoys comparatively higher profit margins and has lesser NPAs (Non Performing Assets) as compareed to ICICI Bank. The higher growth in sales and net profits of HDFC Bank is partly due to merger of Times Bank. Also the brand quality of HDFC group is reflected in HDFC Bank’s valuations. On the other hand ICICI Group’s valuations are comparatively low due to concerns pertaining to the higher level of NPAs. The group is aggressively trying to build its brand by reducing the level of low quality assets and by adopting the latest technology. ICICI Bank will be able to increase its profit margins with better technology, enabling it to control costs. ICICI Bank enjoys comparatively lower valuations, which are likely to be re-rated in time to come.

Comparative valuations
Particulars HDFC Bank ICICI Bank
Market Price (Rs) 229.3 212.1
Price/Book value 7.4 3.6
Market Cap (Rs bn) 55.8 41.7
Market Cap/Gross income 8.2 4.9

Equitymaster requests your view! Post a comment on "HDFC Bank & ICICI Bank – New kids on the block". Click here!


More Views on News

7 Stocks that Mutual Funds Can't get Enough of (Views On News)

Dec 1, 2021

Come hell or high water, these are the top Indian stocks which mutual funds never leave.

HDFC BANK Announces Quarterly Results (2QFY22); Net Profit Up 18.3% (Quarterly Result Update)

Oct 20, 2021 | Updated on Oct 20, 2021

For the quarter ended September 2021, HDFC BANK has posted a net profit of Rs 91 bn (up 18.3% YoY). Sales on the other hand came in at Rs 335 bn (up 5.6% YoY). Read on for a complete analysis of HDFC BANK's quarterly results.

5 Indian Banks with the Lowest NPAs. Here's How they Did It... (Views On News)

Sep 27, 2021

These banks have managed to maintain their asset quality even in the middle of a pandemic.

PNB Reports an Over Three-Fold Jump in Net Profit as Provisions Fall (Views On News)

Aug 3, 2021

The reduction in provisions for bad loans and asset quality stability may have aided the lender's earnings.

Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter (Views On News)

Jul 28, 2021

All you need to know about the latest quarterly results of IndusInd Bank.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 7, 2021 11:46 AM


  • Track your investment in HDFC BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks