Comparison of top four private banks in India
In this blog, let us compare the top four private banks – HDFC bank vs Kotak Mahindra Bank vs ICICI Bank vs Axis Bank on following parameters including key ratios and asset quality.
HDFC Bank vs Kotak Mahindra Bank vs ICICI Bank vs Axis Bank
Net Interest Margin (NIM)
- Here, Kotak Mahindra Bank has highest Net Interest Margin followed by HDFC Bank, Axis Bank and ICICI Bank respectively.
- Being a retail oriented bank with highest CASA ratio, Kotak Mahindra Bank leads in terms of Net Interest Margin (NIM).
Cost to Income Ratio (%)
- This ratio denotes the operational efficiency of the bank. Lower the cost to income ratio, better it is.
- In this quarter (Q2FY21), HDFC Bank has lowest cost to income ratio, while ICICI bank has highest cost to income ratio.
Capital Adequacy Ratio (CAR)
- Recently most of the banks have raised capital and hence Capital Adequacy Ratio (CAR) has increased over the quarters.
- Currently, Kotak Mahindra Bank has highest Capital Adequacy Ratio (CAR) of 23.4% followed by Axis Bank, HDFC Bank and ICICI Bank.
- Current Account and Savings Account deposits are the deposits bearing lower interest rates as compared to timed deposits.
- Hence, higher the proportion of CASA, lower the company’s interest cost.
- Currently, Kotak Mahindra Bank being the largest retail bank has highest CASA ratio of 57% followed by HDFC Bank, ICICI Bank and Axis Bank.
Retail Loan Book %
- Although ICICI Bank is known as a corporate bank, it has highest retail loan book share. It has higher deposits from corporates than retail depositors.
- This is followed by Kotak Mahindra Bank, Axis Bank and HDFC Bank.
- There is a evident shift in HDFC Bank’s lending strategy from retail lending to corporate lending over the last one year.
Gross NPA (%)
- On asset quality front in terms of gross NPA, HDFC Bank looks better placed with lowest Gross NPA of 1.08%.
- On the other hand, ICICI Bank has highest gross NPA of 5.17%.
- In terms of Net NPAs as well, HDFC Bank is better placed with lowest Net NPA of 0.17%.
- This is followed by Kotak Mahindra Bank, Axis Bank and ICICI Bank.
- Here , although ICICI Bank has highest gross NPAs, its net NPAs are quite lower which signifies that 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 highest PCR of 84.5%.
Summary of Comparative Analysis of Top four Private Banks
- Thus, HDFC Bank leads the pack w.r.t Cost to Income Ratio, Gross NPA, Net NPA and Provision Coverage Ratio.
- Kotak Mahindra Bank has highest Net Interest Margin, Capital Adequacy Ratio and CASA Ratio, while ICICI bank has highest share of retail loan book.