Comparison of Top 4 Private Banks in India

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Introduction

In this blog, let us compare the top four private banks in India – HDFC bank vs Kotak Mahindra Bank vs ICICI Bank vs Axis Bank on the following parameters including key ratios and asset quality.

Top 4 Private Banks in India – HDFC Bank vs Kotak Mahindra Bank vs ICICI Bank vs Axis Bank

 

Net Interest Margin (NIM)

Comparison of Top 4 Private Banks in India
  • 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 terms of Net Interest Margin (NIM).
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Cost to Income Ratio (%)

  • This ratio denotes the operational efficiency of the bank. The lower the cost to income ratio, the better it is.
  • In this quarter (Q2FY21), HDFC Bank has the lowest cost to income ratio, while ICICI Bank has the 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 the highest Capital Adequacy Ratio (CAR) of 23.4% followed by Axis Bank, HDFC Bank, and ICICI Bank.

CASA (%)

  • Current Account and Savings Account deposits are the deposits bearing lower interest rates as compared to 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 with the 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 the 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 an evident shift in HDFC Bank’s lending strategy from retail lending to corporate lending over the last one year.
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Gross NPA (%) of these Private Banks in India

  • On the asset quality front in terms of gross NPA, HDFC Bank looks better placed with the lowest Gross NPA of 1.08%.
  • On the other hand, ICICI Bank has the highest gross NPA of 5.17%.

Net NPA(%)

  • In terms of Net NPAs as well, HDFC Bank is better placed with the lowest Net NPA of 0.17%.
  • This is followed by Kotak Mahindra Bank, Axis Bank, and ICICI Bank.
  • Here, although ICICI Bank has the highest gross NPAs, its net NPAs are quite 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%.

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Summary of Comparative Analysis of Top four Private Banks in India

  • 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 the highest Net Interest Margin, Capital Adequacy Ratio, and CASA Ratio, while ICICI Bank has the highest share of the retail loan book.
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