The list of private banks in India is long, so this blog covers the top four private banks – HDFC bank vs. Kotak Mahindra Bank vs. ICICI Bank vs. Axis Bank for comparison on the following parameters: crucial ratios and asset quality for bank ranking in India.
Net Interest Margin (NIM)
- Here, Kotak Mahindra Bank has the highest Net Interest Margin, followed by HDFC Bank, Axis Bank, and ICICI Bank, respectively.
- Being a retail-oriented bank with the highest CASA ratio, Kotak Mahindra Bank leads in Net Interest Margin (NIM).
Cost to Income Ratio (%)
- This ratio denotes the operational efficiency of the bank. Therefore, the lower the cost to income ratio, the better it is.
- This quarter (Q2FY21), HDFC Bank has the lowest cost-to-income ratio, while ICICI Bank has the highest price-to-income percentage.
Capital Adequacy Ratio (CAR)
- Recently, most banks have raised capital, and hence Capital Adequacy Ratio (CAR) has increased over the quarters.
- Currently, Kotak Mahindra Bank has the highest Capital Adequacy Ratio (CAR) of 23.4%, followed by Axis Bank, HDFC Bank, and ICICI Bank.
- Current Account and Savings Account deposits bear lower interest rates than timed deposits.
- Hence, the higher the proportion of CASA, the lower the company’s interest cost.
- Currently, Kotak Mahindra Bank is the largest retail bank has the highest CASA ratio of 57%, followed by HDFC Bank, ICICI Bank, and Axis Bank.
Retail Loan Book %
- Although ICICI Bank is a corporate bank, it has the highest retail loan book share. This is because it has higher deposits from corporates than retail depositors.
- This is followed by Kotak Mahindra Bank, Axis Bank, and HDFC Bank.
- There has been an evident shift in HDFC Bank’s lending strategy from retail lending to corporate lending over the last year.
Gross NPA (%)
- HDFC Bank looks better placed with the lowest Gross NPA of 1.08% on the asset quality front in terms of gross NPA.
- On the other hand, ICICI Bank has the highest gross NPA of 5.17%.
- In terms of Net NPAs, HDFC Bank is placed better with the lowest Net NPA of 0.17%.
- Followed by Kotak Mahindra Bank, Axis Bank, and ICICI Bank.
- Although ICICI Bank has the highest gross NPAs, its net NPAs are relatively lower, which signifies that the bank is undertaking adequate provisioning measures against the NPAs.
Provision Coverage Ratio (PCR)
- All the banks have healthy provision coverage ratios, with HDFC Bank having the highest PCR of 84.5%.
Comparative Analysis of Top Four Private Banks
- Based on private banking comparison, we can conclude that
- HDFC Bank leads the pack w.r.t Cost to Income Ratio, Gross NPA, Net NPA, and Provision Coverage Ratio.
- Kotak Mahindra Bank has the highest Net Interest Margin, Capital Adequacy Ratio, and CASA Ratio, while ICICI Bank has the highest share of the retail loan book.