ICICI and HDFC Bank will be key players in taking India to a $5 Trillion economy
Both Banks have now presented the Q3 results
A thread 🧵on the business performance of both banks and which one should u choose?
Lets go👇
(1/19)
Both Banks have now presented the Q3 results
A thread 🧵on the business performance of both banks and which one should u choose?
Lets go👇
(1/19)
Loan Growth:-
🏦Both Banks reported a robust Loan growth of 20%.
🏦HDFC Bank got its retail loan growth back
🏦ICICI Bank grew steadily in the retail side.
Overall both banks continue to do exceptionally well on loan growth
(2/19)
🏦Both Banks reported a robust Loan growth of 20%.
🏦HDFC Bank got its retail loan growth back
🏦ICICI Bank grew steadily in the retail side.
Overall both banks continue to do exceptionally well on loan growth
(2/19)
Retail Vs Wholesale
For HDFC Bank the ratio is 45:55 Wholesale: Retail
For ICICI Bank the ratio is 40:60 Wholesale: Retail
Both banks are taking completely different strategies to grow
ICICI is going retail aggressive
HDFC is going wholesale+Retail aggressive
(3/19)
For HDFC Bank the ratio is 45:55 Wholesale: Retail
For ICICI Bank the ratio is 40:60 Wholesale: Retail
Both banks are taking completely different strategies to grow
ICICI is going retail aggressive
HDFC is going wholesale+Retail aggressive
(3/19)
Deposit Growth:-
System deposit growth at about 9-10%
🏦HDFC Ban grew deposits by 19%
🏦ICICI grew its deposit by 9%
HDFC Bank is far outperforming the industry on deposit growth.
However, ICICI Bank should start to catch up
(4/19)
System deposit growth at about 9-10%
🏦HDFC Ban grew deposits by 19%
🏦ICICI grew its deposit by 9%
HDFC Bank is far outperforming the industry on deposit growth.
However, ICICI Bank should start to catch up
(4/19)
Non Performing asset(NPAs)-
ICICI Bank:-
🏦Gross NPAs declined to 3.07%
🏦However, the Gross NPA addition was at 5700cr which was slightly higher
🏦Bank has a PCR of 82%
🏦Net NPA declined to 0.55%
(5/19)
ICICI Bank:-
🏦Gross NPAs declined to 3.07%
🏦However, the Gross NPA addition was at 5700cr which was slightly higher
🏦Bank has a PCR of 82%
🏦Net NPA declined to 0.55%
(5/19)
HDFC Bank:-
🏦The Gross NPAs remained at 1.23%
🏦Agri Slippages continue to be high
🏦The PCR remains extremely strong at 73.2%
🏦The credit cost ratio came in at 0.74%(best in many quarters)
(6/19)
🏦The Gross NPAs remained at 1.23%
🏦Agri Slippages continue to be high
🏦The PCR remains extremely strong at 73.2%
🏦The credit cost ratio came in at 0.74%(best in many quarters)
(6/19)
Asset quality improvement for ICICI bank was lower than that for HDFC Bank.
For HDFC Bank, the formation of new bad loans was lower in Q3
However, Asset quality for both banks remains extremely robust
COVID-19 problems are finally behind both banks
(7/19)
For HDFC Bank, the formation of new bad loans was lower in Q3
However, Asset quality for both banks remains extremely robust
COVID-19 problems are finally behind both banks
(7/19)
Cost of funds:-
ICICI pays nearly 3.48% on incremental deposits
HDFC pays nearly the same cost for its deposits
Given the inflationary environment, this is absolutely a steal deal for both banks.
As the interest rates move up,both banks will gain massively.
(8/19)
ICICI pays nearly 3.48% on incremental deposits
HDFC pays nearly the same cost for its deposits
Given the inflationary environment, this is absolutely a steal deal for both banks.
As the interest rates move up,both banks will gain massively.
(8/19)
Capital Adequacy-
ICICI Bank has TIER-1 capital adequacy of 17.09%
HDFC Bank has TIER-1 Capital adequacy of 17.2%
Both banks are sufficiently capitalized to take advantage of the coming upcycle
(9/19)
ICICI Bank has TIER-1 capital adequacy of 17.09%
HDFC Bank has TIER-1 Capital adequacy of 17.2%
Both banks are sufficiently capitalized to take advantage of the coming upcycle
(9/19)
Branch Expansion-
HDFC Bank
The Bank opened branches aggressively
It opened 684 branches this quarter
The bank envisions to be 1-2 km of clients rather than the current 5-6 Km
Verdict-
The cost/Income ratio is up to 39.2%
This could inflate further
(10/19)
HDFC Bank
The Bank opened branches aggressively
It opened 684 branches this quarter
The bank envisions to be 1-2 km of clients rather than the current 5-6 Km
Verdict-
The cost/Income ratio is up to 39.2%
This could inflate further
(10/19)
Merger Hangover on HDFC Bank:-
HDFC book will need CRR+SLR provisions.
The book coming from HDFC ltd doesn't have adequate SLR and CRR provisions.
To make those provisions the bank could need to shore up 80-90000cr of capital.
(11/19)
HDFC book will need CRR+SLR provisions.
The book coming from HDFC ltd doesn't have adequate SLR and CRR provisions.
To make those provisions the bank could need to shore up 80-90000cr of capital.
(11/19)
While getting the capital is not a problem.
This is will be a drag on the RoE of the bank in the near term.
The bank has asked for dispensation from the regulator.
However, the regulator is yet to respond.
ICICI bank has no such hangover
(12/19)
This is will be a drag on the RoE of the bank in the near term.
The bank has asked for dispensation from the regulator.
However, the regulator is yet to respond.
ICICI bank has no such hangover
(12/19)
Valuation:-
ICICI Bank is now available at 3x P/B
HDFC Bank is now available at 3x P/B
Given the larger number of subsidiaries of ICICI Bank,it is relatively cheaper than HDFC Bank.
Both Banks are certainly not cheap.
(13/19)
ICICI Bank is now available at 3x P/B
HDFC Bank is now available at 3x P/B
Given the larger number of subsidiaries of ICICI Bank,it is relatively cheaper than HDFC Bank.
Both Banks are certainly not cheap.
(13/19)
So which result is better?
HDFC Bank performed better on some parameters than ICICI Bank.
ICICI Bank performed better on come parameters than HDFC Bank.
(14/19)
HDFC Bank performed better on some parameters than ICICI Bank.
ICICI Bank performed better on come parameters than HDFC Bank.
(14/19)
We are at the bottom of a credit cycle.
Credit growth is at a 50-year low.
We need strongly capitalized banks with clean balance sheets to achieve the vision of $5 trillion economy.
(15/19)
Credit growth is at a 50-year low.
We need strongly capitalized banks with clean balance sheets to achieve the vision of $5 trillion economy.
(15/19)
Both ICICI Bank and HDFC have:-
1. Strong Balance Sheet
2. Strong Management
3. Strong capital to deploy
4. Huge physical as well as digital presence to tap growth
(16/19)
1. Strong Balance Sheet
2. Strong Management
3. Strong capital to deploy
4. Huge physical as well as digital presence to tap growth
(16/19)
Analysts will be analysts and try to create narratives.
Why should only one of ICICI or HDFC do well?
Both Banks are extremely strong and the scope of opportunity means that both can do extremely well.
Both ICICI+HDFC COMBO will lead India in the next decade to come!
(17/19)
Why should only one of ICICI or HDFC do well?
Both Banks are extremely strong and the scope of opportunity means that both can do extremely well.
Both ICICI+HDFC COMBO will lead India in the next decade to come!
(17/19)
Here is my detailed video Analysis on:-
HDFC Bank analysis👇
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ICICI Bank result analysis👇
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(18/19)
HDFC Bank analysis👇
youtu.be
ICICI Bank result analysis👇
youtube.com
Do like,share and subscribe my youtube channel
(18/19)
Disclaimer:-
This is my study
Not an Investment Advise
Please consult your own investment advisor before investing.
(19/19)
This is my study
Not an Investment Advise
Please consult your own investment advisor before investing.
(19/19)
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