Comparison of FY25 results of India’s two largest private sector lenders by total assets suggests that ICICI Bank maintains its lead over HDFC Bank, top players in certain major parameters. Both declared the results on 19 April.
ICICI Bank’s FY25 NET Interest Margin (NIM) stood at 4.3% vs. 4.3% of HDFC Bank, which is struggling to regain its Mojo to reach 4.1% NIM received in FY23 just before its merger with HDFC. Even when it comes to returning to the average property (ROAA), the ICICI bank is at 2.4% for HDFC Bank’s FY25 vs. 1.9% ROAA. In terms of the size of the balance sheet, ICICI Bank’s total assets rose 13% in FY 25, which was an increase of 8% singles for HDFC Bank.
HDFC Bank increased its progress (including safe loan) only about half the rate of increase in deposit, while ICICI Bank showed almost the same increase in both advances and deposits at 14% for FY 25.
The ICICI Bank has taken a higher risk than HDFC Bank, which is evident from risk-loving assets to total assets ratio. Simply put, if both banks have lent the same amount and one lends more in the mortgage category, one with high mortgage loans will have low risk-loaded loans. By March 2025, the east ratio was 76%, while it was 68% for the latter. However, ICICI Bank has well managed high risk, given that its credit cost (cost of poor loan) is at 35 basis points, which is very close to HDFC Bank. A base point is one-sixth part of a percentage point.
ICICI has a lead
To ensure this, ICICI Bank’s March Quarter (Q4FY25) is also impressive in isolation without comparison with protest peers.
Core pre-provisioning operating profit (PPOP), subsidiaries and treasury income, without considering dividend income, increased 12.7% year-to-year 16,710 crores. Pure Interest Income (NII), including a small component of interest on income tax refund 114 crores, 11% increased 21,193 crores. The fee income was up to 16% 6,306 crores. While the lent-linked fees are doing well, the bank is also focusing on paying the payment and transaction fee from the card. The cost-income ratio improved 130bps, as income increased at a faster speed compared to operating expenses.
In addition to the gross slipage or gross non-performing assets (NPAs), there was less than 1.6% for Q4Fy25-improvement of 20bps on the year. Although comparison of a fourth-by-wage usually reveals a better picture of the old NPA, it is distorted as agricultural loans, including farmers credit cards, showing high slippery in the first and third quarters of a financial year. The management of the bank has not yet relieved any significant stress in property quality.
Meanwhile, for peers, the low interest rate cycle is also likely to hit the ICICI Bank. Thus, the Kotak institutional equities have reduced the bank’s earnings evidences marginally. Analysts note that the share of repo loans in total loans has increased rapidly in the last three years to 53% by 41% to 53%. These debt are unsafe for any reduction in repo rate.
Brokerage gave importance to the bank at 2.7X of estimates or 19X income at 2.7X of the adjusted book value based on March 2027. After factoring in the value of subsidiaries 230 per share, their goal for stock is value 1,600.
A new 52 weeks killed in ICICI Bank shares On Monday, 1,436 appellates, although they closed the flats. The stock had jumped 4% in the previous trading session before the results.
