Embarking on the financial battlefield of Indian banking, the clash of HDFC Bank vs ICICI Bank unfolds as a captivating saga for investors.
Reason?
Both performed well in the rough patch of banking stocks in India.
In the intricate realm of branch expansion, customer acquisition, and quarterly results, the question looms large i.e. HDFC Bank vs ICICI Bank- Which reigns supreme among private banks?
Join us as we unravel the factors that distinguish these financial titans, seeking which is the better private bank.
Let’s begin!
(A) HDFC Bank vs ICICI Bank: Comparing the Profiles
First of all, let’s look at the outlines of both companies.
(A.1) HDFC Bank
HDFC Bank Limited, commonly known as HDFC, operates as an Indian banking and financial services company with its headquarters in Mumbai. As of August 2023, it stands as India’s largest private sector bank in terms of assets and is globally ranked as the fifth-largest bank by market capitalization.
This position was solidified after the acquisition of its parent company, HDFC. Recognized for its significant size, the Reserve Bank of India has designated HDFC Bank as a Domestic Systemically Important Bank (D-SIB). Established in August 1994 following regulatory approval, the bank commenced operations in January 1995.
Presently, with a market capitalization of $150 billion (as of September 6, 2023), HDFC Bank holds the third-largest position among companies listed on Indian stock exchanges. Additionally, it stands as the sixteenth largest employer in India, boasting a workforce of nearly 1.73 lakh employees.
(A.2) ICICI Bank
ICICI Bank Limited, a Mumbai-based Indian multinational bank and financial services company, maintains its registered office in Vadodara. Offering an extensive array of banking and financial services to both corporate and retail customers, the bank operates through various delivery channels and specialized subsidiaries dealing with investment banking, life and non-life insurance, venture capital, and asset management.
With a vast network of 5,900 branches and 16,650 ATMs spanning India, the bank’s influence extends to 17 countries.
Subsidiaries in the United Kingdom and Canada, branches in the United States, Singapore, Bahrain, Hong Kong, Qatar, Oman, Dubai International Finance Centre, China, and South Africa, along with representative offices in the United Arab Emirates, Bangladesh, Malaysia, and Indonesia, showcase the global reach of ICICI Bank.
Additionally, the bank’s UK subsidiary has branched out into Belgium and Germany.
(A.3) HDFC Bank vs ICICI Bank: A Brief Overview
| Particulars | HDFC Bank Limited | ICICI Bank Limited |
| Type of Company | Publicly Listed | Private Development Finance Institution but Publicly Listed |
| Traded as | NSE: HDFCBANK BSE: 500180 NYSE: HDB (ADS) BSE SENSEX Constituent NSE NIFTY 50 Constituent | BSE: 532174 NSE: ICICIBANK NYSE: IBN BSE SENSEX Constituent NSE NIFTY 50 Constituent |
| Industry | Financial Services | Financial Services |
| Founded | August 1994 (29 years ago) (via the merger between HDFC-HDFC bank) | January 1994 |
| Headquarters | Mumbai (Maharashtra, India) | Mumbai (Maharashtra India), Registered Office- Vadodara, Gujarat |
| Area Served | India | Worldwide |
| Key People | Atanu Chakraborty (Chairman), Sashidhar Jagdishan (CEO) | Girish Chandra Chaturvedi (Chairman), Sandeep Bakhshi (MD & CEO) |
| Products | Credit cards Consumer banking Commercial banking Finance and insurance Investment banking Mortgage loans Private banking Private Equity Wealth management | Banking, Commodities, Credit cards, Equities trading, Insurance, Investment management, Mortgage loans, Mutual funds, Private equity, Risk management, Wealth management, Asset Management |
| Subsidiaries | HDFC Life HDFC ERGO HDFC Securities HDFC Asset Management Company HDFC Mutual Fund HDB Financial Services HDFC Credila Financial Services Limited | ICICI Prudential ICICI Lombard ICICI Securities ICICI Direct ICICI Home Finance Company |
When comparing HDFC Bank and ICICI Bank, it’s essential to consider various factors. Recent reports indicate that ICICI Bank has been showing remarkable progress across several parameters and has surpassed HDFC Bank in net interest income and profit growth.
On the other hand, InCred Equities prefers HDFC Bank over ICICI Bank due to its superior ground presence and faster customer acquisition. Despite this, HDFC Bank continues to be the larger of the two lenders, but ICICI Bank is closing the gap.
It’s clear that both banks have their strengths, and the choice between the two may depend on specific priorities and preferences.
Go through the next section to get detailed information.
(B) HDFC Bank v ICICI Bank: Financial Comparison
Now, let’s see how both these banking titans have performed financially in the fiscal year 2023-
| Financial Aspects (FY23) | HDFC Bank | ICICI Bank |
| Market Capitalization | Rs.12.51 trillion | Rs.7.26 trillion |
| Revenue | Rs.2.05 lakh crore ($26 billion) | Rs.186,178.80 crore ($23 billion) |
| Operating Income | Rs.61,498.39 crore ($7.7 billion) | Rs.53,196.39 crore ($6.7 billion) |
| Net Income | Rs.45,997.11 crore ($5.8 billion) | Rs.34,036.64 crore ($24.3 billion) |
| Profit | Rs.34,16,310 crore (Before Tax) | Rs.31,896.50 (Net Profit) |
| Total Assets | Rs.25.3 lakh crore ($320 billion) | Rs.1,958,490.50 crore ($250 billion) |
| Total Equity | Rs.2.85 lakh crore ($36 billion) | Rs.214,497.80 crore ($27 billion) |
| Number of Employees | 1,77,000 | 130,542 |
(C) HDFC Bank vs ICICI Bank: Which one is a better investment option?
To understand that, you need to go through the following table-
| Criteria | HDFC Bank | ICICI Bank |
| Gross NPA | Stable (1.1%-1.42% over 24 quarters) | Improved (Dropped by 518 basis points over 24 quarters) |
| Loan Growth | 17% | 18.7% |
| Net Interest Margin | 4.3% (Consistent) | 4.9% (Improved by 163 basis points over the last 24 quarters) |
| Net Interest Income Growth | Consistent Growth | Outperformed HDFC Bank on a year-on-year basis |
| Net Profit (Q4 FY23) | Rs.12,595 crore | Rs.9,122 crore |
| Net Interest Income (Q4 FY23) | Rs.23,352 | Rs.17,667 crore |
| Gross NPA (QoQ Change) | 1.12%-11 bps | 2.81%-26 bps |
| Net NPA (QoQ Change) | 0.27%-6 bps | 0.48%-7 bps |
| Deposit Growth (YoY) | 20.8% | 10.9% |
| Return on Asset (RoA) | Stable (1.8% – 2.1% for the last 14 quarters) | Significant improvement, reaching 2.39% in Q4 FY23 |
| Branch Network Growth | Over 47% between Q3 FY20 and Q4 FY23 | Only 11.85% growth between Q3 FY20 and Q4 FY23 |
Here are some key takeaways from the table-
(C.1) HDFC Bank
- Consistent loan growth
- Stable net interest margin
- Robust net profit and net interest income
- Unmatched deposit growth
- Proven track record in maintaining asset quality
(C.2) ICICI Bank
- Higher YoY loan growth
- Improved net interest margin over the last 24 quarters
- Strong Q4 FY23 performance
- Significant improvement in return ratios
- Growing presence in the banking sector
(C.3) Which one is a better investment option- HDFC Bank vs ICICI Bank?
When considering your investment options between HDFC Bank and ICICI Bank, it’s essential to weigh their unique attributes. HDFC Bank boasts consistent loan growth, unmatched deposit growth, and a stable net interest margin. Meanwhile, ICICI Bank presents higher YoY loan growth, improved net interest margins, and a strong Q4 FY23 performance.
To make the right choice, align these factors with your risk tolerance and investment goals. If you prioritize stability and proven performance, HDFC Bank might be your go-to.
On the other hand, if you seek growth potential and improved ratios, ICICI Bank could be the preferred option. It all boils down to what aligns best with your individual investment strategy.
(D) Why Does InCred Equities Prefer HDFC Bank over ICICI Bank?
Well, that’s not just a heading but a headline that created buzz in the market!
What is InCred Equities? You may ask.
InCred Equities is a part of the InCred Group, which is a leading diversified financial services company that offers equities research and trading services to a wide range of clients, including institutions, corporates, and Ultra-High/High-Net-Worth Individuals. The company strongly focuses on delivering tailor-made financial solutions. InCred Group operates in the BFSI space through various entities, such as InCred Finance in Lending and InCred Capital in Wealth and Asset Management.
Okay. How did InCred Equities come to such a conclusion?
Curious to know why? Go through the table below that shows the comparative analysis made by InCred Equities-
| Factors for Preference | HDFC Bank | ICICI Bank |
| Granular Branch Expansion | Aggressive expansion with 2,213 branches in 2 years | Slower branch growth with 634 branches added |
| Faster Customer Acquisition | Superior ground presence and quicker acquisition | Relatively slower customer acquisition |
| Market Share Dominance | Higher market share in credit card issuances and spends | Slightly lower market share in these categories |
| Cross-Selling Opportunities | Envisaged significant opportunities post-merger | Focussed more in mining existing customer base |
Sounds complicated? Let me explain it in simple terms.
Let’s look at the factors one by one-
- Granular Branch Expansion: HDFC Bank has undertaken a more aggressive branch expansion strategy, adding 2,213 branches in the past two years, providing a first-mover advantage in rural areas.
- Faster Customer Acquisition: InCred notes HDFC Bank’s superior ground presence and faster customer acquisition, which contributes to diversified and deeply penetrated growth with a sticky customer base.
- Market Share Dominance: HDFC Bank has exhibited dominance in credit card issuances and spending, holding a higher market share compared to ICICI Bank.
- Cross-Selling Opportunities: Post the merger with HDFC Limited, InCred envisions significant cross-sell opportunities for HDFC Bank among its existing mortgage customers, potentially aiding retail growth.
Thus, these factors led to InCred Equities’ preference for HDFC Bank over ICICI Bank in their investment analysis.
(E) HDFC Bank vs ICICI Bank: Which is the better private bank?
Choosing between HDFC Bank and ICICI Bank as the better private bank depends on various factors, each having its strengths and considerations.
Below, we have presented a comparative analysis of HDFC Bank vs ICICI Bank. This will help you evaluate which one might be considered the better private bank-
| Criteria | HDFC Bank | ICICI Bank | Analysis |
| Loan Growth | Consistent | Higher YoY growth | If you prioritize a bank with steady and reliable loan growth, HDFC Bank might be more suitable. However, if you seek higher growth potential, ICICI Bank could be appealing. |
| Net Interest Margin (NIM) | Stable (4% – 4.4%) | Improved by 163 basis points over 24 quarters | HDFC Bank provides a stable NIM, while ICICI Bank has successfully enhanced its margin, reflecting a positive trajectory. |
| Net Profit | ₹12,595 crore (Q4 FY23) | ₹9,122 crore (Q4 FY23) | HDFC Bank demonstrates higher profitability in the given quarter, indicating robust financial performance. |
| Net Interest Income | ₹23,352 crore (Q4 FY23) | ₹17,667 crore (Q4 FY23) | HDFC bank earned more profits compared to ICICI bank in the same quarter |
| Gross NPA Ratio | Stable between 1.1% and 1.42% over 24 quarters | Significant improvement, dropped by 518 basis points | Both banks exhibit sound asset quality, but ICICI Bank’s notable improvement indicates effective management of non-performing assets. |
| Deposit Growth | 20.8% YoY to ₹18.83 lakh crore | 10.9% YoY to ₹11.8 lakh crore | HDFC Bank outpaces ICICI Bank in deposit growth, reflecting strong customer trust and confidence. |
| Operating Expenses | Increased by 32.3% in Q4 FY23 due to branch expansion | Quarterly OPEX per branch slightly higher than HDFC Bank | HDFC Bank’s branch expansion strategy contributes to increased operating expenses, while ICICI Bank maintains a relatively lower branch growth. |
| Market Performance (Last 6 Months) | Shares rose by over 16% | Shares down over 2%, underperforming compared to HDFC Bank | HDFC Bank’s better market performance over the last six months indicates higher investor confidence. |
Considering the factors discussed, both banks have their merits. HDFC Bank stands out with its stable performance, strong deposit growth, and market confidence.
On the other hand, ICICI Bank portrays higher growth potential, improved asset quality, and profitability.
Your choice should align with your investment goals, risk tolerance, and preference for stability or growth. It’s advisable to monitor these factors over time for a more informed decision.
Note: Do you know there are numerous small finance banks in India that are doing great in the rural and semi-urban areas? Visit the article on “Top 10 small finance banks in India” for detailed information.
(F) Final Judgment on HDFC Bank vs ICICI Bank: Who is the winner?
In a nutshell, both HDFC Bank and ICICI Bank have their own strengths. HDFC Bank is like a steady ship with consistent profits and strong deposits. On the other hand, ICICI Bank is like a growing tree, showing potential for more profits and better quality.
The choice between them depends on what you want – a solid and stable option or a bank with growth opportunities. It’s like choosing between a reliable old friend and a friend who’s always up for something new.
So, take your pick based on what suits your needs and plans for the future!
