HDFC Bank vs ICICI Bank: Banks have been around since currencies were first minted around the world. Earlier, they were used as a place where coins and currencies were stored.
But that’s all biblical stories now. Today with the advent of technology, banks are doing a lot more than just store value.
In this article, we will take a look at the top two private sector banks in India i.e. ICICI vs HDFC Bank. Keep reading to find out!
Table of Contents
Banking Industry Overview
The Covid-19 pandemic has resulted in significant disruptions to the banking industry in India. The pandemic resulted in the bank credit growth remaining subdued on account of a lack of demand.
Only recently, are there clear signs of credit revival alongside other green flags signaling a recovery in the economy? This was facilitated by favorable liquidity conditions and a gradual unlocking of the economy.
In FY21, total assets in the public and private banking sectors were US$ 1,602.65 billion and US$ 878.56 billion, respectively.
According to the RBI, bank credit stood at Rs. 110.46 trillion (US$ 1.47 trillion) and credit to non-food industries stood at Rs. 109.82 trillion (US$ 1.46 trillion) as of September 2021.
Business Overview
HDFC Bank Ltd
HDFC Bank is one of India’s leading private banks and was among the first to receive approval from the Reserve Bank of India (RBI) to set up a private sector bank in 1994.
The Bank caters to large and mid-corporates, financial institutions, PSUs, MSMEs, farmers, wholesalers, and traders.
Currently, the bank has Banking Outlets totaling 21,360, Total ATMs + cash deposit and withdrawal machines of 16,087, and 5608 Branches.
ICICI Bank Ltd
ICICI Bank Ltd. is an Indian multinational bank and financial services company that was established in 1955.
It offers a wide range of products and services for corporate and retail customers in the areas of investment banking, life, non-life insurance, venture capital, and asset management.
The bank has a network of 5,275 branches and 15,589 ATMs across India and has a presence in 17 countries.
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Financial Metrics
Let us have a look at the finances of HDFC Bank vs ICICI Bank:
HDFC Bank vs ICICI Bank – Revenue
ICICI Bank saw a 21% growth in their total deposit which amounted to Rs 932,522 Cr. On the other hand, HDFC Bank saw an increase of 16.3% where their total deposit stood at Rs 13,35,060 Cr.
Interest earned by a bank is concise to be one of the main sources of their revenue. In the last 5 years, both HDFC bank and ICICI bank have shown a growing trend in their income.
In terms of numbers, HDFC is ahead with a total interest income of Rs 1,28,552.39 Cr in FY21 while ICICI earned Rs 89,162.66 Cr.
| Revenue | |||||
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Total Income ((Rs in Cr) | |||||
| HDFC Bank Ltd | 86,148.99 | 1,01,344.45 | 1,24,107.79 | 1,47,068.27 | 1,55,885.27 |
| ICICI bank Ltd | 1,13,397.63 | 1,18,969.10 | 1,31,306.50 | 1,49,786.10 | 1,61,336.48 |
| Interest Earned (Rs in Cr) | |||||
| HDFC Bank Ltd | 73,271.35 | 85,287.84 | 1,05,160.74 | 1,22,189.29 | 1,28,552.39 |
| ICICI bank Ltd | 60,939.98 | 62,162.35 | 71,981.65 | 84,835.77 | 89,162.66 |
HDFC Bank vs ICICI Bank – Operational Capacity
Gross Non-Performing Assets refers to the sum of any unpaid debt, which is classified as non-performing loans. This is an important metric used to analyze the position of a bank.
The lower the ratio the better the health of the bank. ICICI has a significantly higher ratio than HDFC.
CASA ratio of a bank is the ratio of deposits in current and saving accounts to the total deposits. Over the years, both the banks have been able to maintain the ratio at par with each other.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Gross NPA | |||||
| HDFC Bank Ltd | 1.05% | 1.30% | 1.36% | 1.26% | 1.32% |
| ICICI bank Ltd | 7.89% | 8.84% | 6.70% | 5.53% | 4.96% |
| CASA Ratio | |||||
| HDFC Bank Ltd | 48.04 | 43.48 | 42.36 | 42.19 | 46.08 |
| ICICI bank Ltd | 49.9 | 51.32 | 48.78 | 44.84 | 46.17 |
HDFC Bank vs ICICI Bank – Profitability
The average 5-year net profit margin of HDFC bank is 22.22% which is higher than ICICI Bank which has a ratio of 15.44%.
Net interest margin (NIM) reveals the amount of money that a bank is earning in interest on loans compared to the amount it is paying in interest on deposits. HDFC bank has maintained a higher ratio on average than ICICI bank.
The credit deposit ratio is also known as the Loan deposit ratio is a financial ratio that measures the value of a bank’s loans to the value of its deposits.
Both the banks have a high CDR ratio. However, the 5 year average of ICICI is 92.5 which is more than HDFC with 90.7%.
| Profit Margin ratios | |||||
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Net Profit Margin (%) | |||||
| HDFC Bank Ltd | 20.86 | 21.76 | 21.34 | 22.34 | 24.78 |
| ICICI bank Ltd | 18.61 | 14.64 | 7.9 | 13.23 | 22.84 |
| Net Interest Margin (NIM) (%) | |||||
| HDFC Bank Ltd | 4.17 | 4.04 | 4.15 | 3.95 | 3.97 |
| ICICI bank Ltd | 2.9 | 2.71 | 2.9 | 3.14 | 3.15 |
| Credit Deposit Ratio (CDR) | |||||
| HDFC Bank Ltd | 91.04 | 88.79 | 94.22 | 91.05 | 88.87 |
| ICICI bank Ltd | 100.53 | 96.77 | 94.96 | 88.19 | 82.48 |
HDFC Bank vs ICICI Bank – How Much Are Investors Earning?
The return on equity ratio is calculated by dividing the net income of the bank by the shareholders’ equity. The average 5 years ROE of HDFC is 17.39% which is higher than that of ICICI bank which has a 5-year average of 10.05%.
ROA ratio is used to determine how efficiently a company uses its assets to generate a profit. As per the consensus, an ROA of 1% or more is considered satisfactory. HDFC has a 5 year average of 1.87% whereas ICICI has 0.95%.
| Return ratios | |||||
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Return On Equity (ROE) | |||||
| HDFC Bank Ltd | 18.41 | 18.43 | 17.05 | 16.54 | 16.5 |
| ICICI bank Ltd | 11.76 | 8.7 | 5.2 | 9.72 | 14.85 |
| Return On Assets (ROA) | |||||
| HDFC Bank Ltd | 1.85 | 1.86 | 1.87 | 1.9 | 1.88 |
| ICICI bank Ltd | 1.19 | 0.86 | 0.48 | 0.86 | 1.38 |
| Earnings Per Share (EPS) | |||||
| HDFC Bank Ltd | 0.01 | 0.01 | 0.01 | 0 | 0.01 |
| ICICI bank Ltd | 0 | 0 | 0 | 0 | 0 |
HDFC Bank vs ICICI Bank – How Does The Valuation Of The Company Look?
The P/E ratio is a metric that lets investors know how much the company is earning in relation to how much they are paying. The sectoral PE is 29.80. The 5-year average PE of HDFC is 24.43 while ICICI has a 5 average of 28.66.
The P/B ratio is used to compare a firm’s market capitalization to its book value. Over the years, HDFC bank has maintained a higher ratio than ICICI bank.
| Valuation Parameter | |||||
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Price to Earnings Ratio (PE) | |||||
| HDFC Bank Ltd | 24.19 | 26.52 | 28.25 | 17.34 | 25.86 |
| ICICI bank Ltd | 15.84 | 23.2 | 60.44 | 21.96 | 21.87 |
| Price to Book Value (P/B) | |||||
| HDFC Bank Ltd | 4.03 | 4.48 | 4.11 | 2.68 | 3.92 |
| ICICI bank Ltd | 1.59 | 1.66 | 2.31 | 1.75 | 2.6 |
| Dividend Yield | |||||
| HDFC Bank Ltd | 0.76 | 0.69 | 0.65 | 0.29 | 0.44 |
| ICICI bank Ltd | 0.9 | 0.54 | 0.25 | 0 | 0.34 |
HDFC Bank vs ICICI Bank – Shareholding Pattern of the Company
Future Prospects Of The Company
HDFC Bank Ltd: The bank has a focus on creating new growth engines by expanding into new business verticals and delivery channels.
Along with that, it is also focusing on innovating its services by leveraging technology. They recently launched Project Future Ready to catalyze, create and capture the next wave of growth.
ICICI Bank Ltd: The Bank has expanded its mobile banking app, iMobile, to iMobile Pay which offers payment and banking services to customers of any bank.
Apart from that, the bank is also focusing on creating a robust banking ecosystem by forging multiple partnerships. It has plans to leverage technology to grow while optimizing its cost.
In Closing
Banks in India have for the past several quarters seen muted corporate credit growth as well as retail credit growth.
However, the banks are now recovering from the stressed situation and moving to the pre-pandemic levels. That’s all for this article on HDFC bank vs ICICI Bank.
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