ICICI Bank and HDFC Bank are two large private sector lenders, both of which have been top picks for investors and analysts. But have you ever wondered if one is better than the other, let’s find out?

Stock prices

Based on stock returns alone, ICICI Bank appears to have the upper hand over HDFC Bank. ICICI Bank has given multibagger returns over the past 3 years, up 127% vs HDFC Bank up 36%. In 2022 year-to-date, ICICI Bank also grew by 23% compared to a 2% increase for HDFC Bank. And over the past year, ICICI Bank has grown by 26%, compared to a decline of 5% for HDFC Bank.

By comparison, Nifty Bank is up 9% in the past year and 15% in 2022 so far.

Since July, ICICI Bank has gained almost 25%, while HDFC Bank has gained around 10% after its strong June quarter results.

About the firms

ICICI Bank offers various banking products and financial services in India and abroad. It operates through the retail banking, wholesale banking, treasury, other banking, life insurance, general insurance and others segments. As of June 30, 2022, it had a network of 5,534 branches and 13,379 ATMs. ICICI Bank Limited was founded in 1955 and is headquartered in Mumbai, India.

HDFC Bank Limited provides retail and corporate banking and financial services in India, Bahrain, Hong Kong and Dubai. It operates in Treasury, Retail Banking, Wholesale Banking, Other Banking and Unallocated segments. The company operates 6,378 branches and 18,620 ATMs in 3,203 cities. As of March 31, 2022, it had 21,683 bank outlets. The company was incorporated in 1994 and is based in Mumbai, India.


In terms of financial services, both banks posted strong earnings last quarter. India’s second largest private sector lender, ICICI Bank, reported a 50% year-on-year (YoY) increase in profit after tax (PAT) at 6,905 crore in the June quarter vs. 4,616 crores in the corresponding quarter of last year.

Net interest income (NII) increased 21% year-on-year to reach 13,210 crore and its Net Interest Margin (NIM) for the June quarter stood at 4.92% vs. 10,936 crores in the same quarter last year. Its total revenue in the first quarter of FY23 also increased to 28,336.74 crores of 24,379.27 crore in Q1 FY22.

On the other hand, the net profit of HDFC Bank, India’s largest lender, increased by 19% to reach 9,195.99 crores in the June quarter from 7,729.64 crores a year ago, but down from 10,055.18 crores in the previous March quarter. His total income was 41,560 crore on a stand-alone basis, compared to 36,771 crore in the period a year ago.

Private lender net interest income (NII) increased 14.5% year-on-year to 19,481.4 crores of 17,009 crores in the same quarter last year.

HDFC Bank’s net profit grew at a CAGR of 15.5% over the past five years, compared to ICICI Bank’s net profit growth of 27.3%. Despite higher provisions, ICICI Bank’s net profit growth is higher than HDFC Bank’s, indicating operational efficiency.

What is better?

Last month, Jefferies, in a note, highlighted the fact that ICICI Bank offers the best risk-reward combination among all global banks. He said the lender would deliver superior returns on assets consistently and has enough firepower to participate in India’s credit recovery without a bad debt crash.

Sunil Damania, Chief Investment Officer, MarketsMojo also agrees.

Between the two, ICICI Bank is a better investment. “The reason is simple – growth is higher with ICICI Bank. The new CEO of the bank is taking appropriate actions and strategies to ensure that ICICI Bank stays ahead of the curve. On the other hand, HDFC Bank is still struggling as it is unable to fix its digital strategy,” he said.

Moreover, while Siddarth Bhamre, Head of Research, Religare Brokerage thinks both lenders are good buyers, he predicts that ICICI Bank will outperform, although not by far.

“Historically, ICICI Bank on P/ABV basis always traded at a discount with HDFC Bank as the latter had consistency and higher growth visibility. Over the past two years we have witnessed visibility of higher and consistent growth at ICICI as its product mix has changed with the retail portfolio weighting increasing which presents less delinquency issues HDFC Bank had an issue related to its card business and was experiencing higher growth slower than before.

Now, ICICI Bank is trading at a slightly higher P/ABV than HDFCBANK, as its stock has outperformed from March 2022 to date by a wide margin. Going forward, we believe ICICI Bank may continue to outperform, but not by a very wide margin and therefore both stocks are a good buy from a long-term perspective,” Bhamre explained.

Another supporter of ICICI Bank is Vinit Bolinjkar from Ventura Securities. He believes that ICICI Bank is better positioned than HDFC Bank due to its recent business performance and improved operating metrics.

ICICI Bank’s strongest performance point was its NII growth in the first quarter of FY23, which was higher than that of HDFC Bank, he noted. He also pointed out that ICICI Bank’s loan portfolio has seen significant changes in its overall composition. After the pandemic, ICICI’s book became a big retail business while HDFC Bank ventured into big wholesale lending, he said.

“Based on valuation, ICICI Bank is trading at FY25 P/B of 2.2x vs. HDFC Bank at 2.6x. at a cheaper valuation Earlier this gap was larger but has recently been closed largely due to the erosion of HDFC Bank’s valuation over the past two years due to concerns over the uncertainty surrounding its merger with HDFC and a change in management,” Bolinjkar explained.

Titles axis also noted that both ICICI Bank and HDFC Bank had achieved good operational results. However, in the near term, ICICI Bank will continue to outperform its peers, supported by sustained credit growth momentum, NIM’s expansion, benign borrowing costs and strong asset quality.

“HDFC Bank has delivered consistent performance in terms of credit growth, stable asset quality and superior yield ratios across credit cycles. However, concerns surrounding the merger are an overhang and are likely to continue. “overshadow the performance of the business, thus potentially weighing on the However, in the longer term, we believe the merger will be accretive. In the medium to long term, we like both ICICI Bank and HDFC Bank,” said the brokerage house.

Vinod Nair, head of research at Geojit Financial Services also believes that HDFC Bank will underperform in the short term. “Before the pandemic, HDFC Bank enjoyed a significant premium over ICICI Bank given its consistent performance, superior asset quality and stronger parentage. ICICI Bank experienced a recovery in its business performance. After the pandemic, HDFC Bank focused more on wholesale lending, which put pressure on margins. We are positive on both banks, but HDFC Bank is a better long-term bet as it should ride out these short-term headwinds and is available at discounted valuations. However, in the short term, HDFC Bank may continue to underperform,” he said.

Meanwhile, Pranjal Kamra – CEO, Finology companies said that while ICICI is expected to outperform in the near term, we believe both companies are well positioned to ride the credit cycle from a medium to long term perspective.

“Comparing the two largest private lenders: HDFC Bank and ICICI, the former has consistently led the market in terms of valuation until recently. But with strong growth indicators, improving asset quality and expanding of ROE, ICICI took the lead with a P/BV of 3.5x vs. HDFC’s 3.43x.HDFC Bank has consistently reported reduced and stable NPAs across interest cycles, while credit quality of ICICI Bank has fluctuated considerably, but has seen a drastic improvement lately. The mega-merger with HDFC is the main reason for HDFC Bank’s underperformance, but we believe these factors are already factored in,” did he declare.


The banking sector is expected to outperform due to the improving economic outlook and the recovery in credit growth. Another factor driving the segment is strong buying by FIIs. Due to the low cost of funds and advantages of scale, large banks will benefit the most from this trend, experts say.