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Time and again, over the years, the Indian economy has been resilient to global volatilities such as financial constraints, geopolitical tensions, and environmental issues. The State Bank of India (SBI) and HDFC Bank, two giants of the banking sector, have played a central role in this economic narrative. The stocks of these banks have also been a popular investment choice in the financial market. Thus, it will be helpful for market investors and market enthusiasts to evaluate which is better, SBI vs. HDFC.
In this article, we will explore the SBI vs. HDFC Bank debate, learn about both banks in brief, understand their recent stock performance, and compare the financials of both institutions. This will help you conclusively understand which investment between SBI vs. HDFC Bank will suit you better according to your preferences.
Key Takeaways
- SBI has outperformed HDFC Bank in stock price growth over the past year and three years, highlighting its stronger market performance.
- HDFC Bank leads in revenue and profit after-tax growth, demonstrating its superior financial performance despite lower stock growth.
- Both banks have improved their asset quality with decreased non-performing assets, indicating effective management of bad loans.
Comparing the Financials
For detailed insights, let us compare the financials of both SBI and HDFC Bank. We will be taking the financial metrics from Q3 of FY24 to Q3 of FY 2023. Let us illustrate the trends:
- Revenue and profits
To begin with, both the banks have experienced an increase in revenues. SBI’s revenue rose to Rs. 1,06,734 crore from Rs. 86,616 crore within the year, despite a fall in the profit after tax. On the other hand, HDFC Bank’s revenue and PAT saw an increase. HDFC’s revenue touched Rs. 71,770 crore from Rs. 33,620 crore, and the PAT also increased to Rs. 17,160 crore from Rs. 12,259.50 crore a year ago. This marks a better performance of HDFC Bank in terms of revenue and PAT. - Net interest income
The net interest income of both banks improved in this period. SBI’s NII increased to Rs. 39,816 crore from Rs. 38,069 crore, and HDFC Bank’s NII reached Rs. 28,470 crore from Rs. 22,990 crore. This increase is a good sign and indicates that both banks are growing their assets that earn interest and are managing the interest expenses efficiently. - Asset quality
This is reflected in the metric of Gross NPAs (non-performing assets). The GNPA of SBI fell to 2.42% from 3.14%, and HDFC Bank’s GNPA also declined marginally to hit 1.26%, which was down from 1.23%. This ratio is indicative of both banks dedicatedly working towards resolving and reducing bad loans. - Deposits and advances
Both banks experienced increases in deposits and advances. HDFC Bank’s deposits reached Rs. 22,14,000 crore from the earlier Rs. 17,33,200 crore, and advances hit Rs. 24,69,300 crore, increasing from Rs. 15,06,800 crore. SBI’s deposits also reached Rs. 47,62,221 crore from Rs. 42,13,557 crore, and advances increased to Rs. 35,84,252 crore from the earlier Rs. 31,33,565 crore. These numbers indicate that both banks have customers’ confidence as lending and deposits have increased. - CASA and PCR
CASA stands for Current Account Savings Account Ratio, and PCR stands for Provision Coverage Ratio.
In the assessment period, SBI’s CASA stayed consistent, while HDFC Bank’s moved slightly from 44% to 38%. At this same time, SBI’s PCR stayed quite high at 91.52 percent compared to HDFC Bank’s 73%. These measures are indicative of strong provisioning measures employed by both banks to manage their loans. - Return on Assets and net interest margin
While the return on assets for SBI slightly increased to 1.51% from 1.12%, its net interest margin fell to 3.28% from 3.29%. On the other end, HDFC Bank’s ROA fell slightly to 0.49% from 0.56%, and the net interest margin also decreased to 3.40% from 4.10%. These metrics indicate that both banks operated efficiently and maintained positive and profitable signs.
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Frequently Asked Questions
HDFC Bank VS SBI Bank
Which bank account is better, HDFC or SBI?
Both these banks have different strengths, and you should decide which is better for you. In general, an HDFC Bank account is preferred by urban customers seeking strong financial performance, digital banking services, and high profitability. On the other hand, SBI suits those valuing a vast network of branches and consistent growth, especially in rural areas.
Which share is better, SBI or HDFC Bank?
The answer to this could depend on your investment goals. SBI shares have increased over 100% in the past 3 years, making it a strong and stable performer. However, while HDFC Bank shares have not grown as much as SBI’s, the bank’s fundamentals remain strong, and it is poised to grow in the future.
Disclaimer
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Investments in the securities market are subject to market risk, read all related documents carefully before investing.
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