Over the last few articles, we have seen the performance of leading players from different sectors in India. In our today\’s article we shall focus on the banking sector.
Performance of best banking stocks in India in FY21:
HDFC Bank is India’s largest private sector bank that offers a number of products and services including wholesale banking, retail banking, treasury, auto loans, two-wheeler loans, personal loans, loans against property, consumer durable loan, lifestyle loan and credit cards.
Performance of HDFC Bank Stock in FY21
In FY21, HDFC Bank gained 72%, while Nifty gained 71%. HDFC Bank was a marginal outperformer in comparison with the Nifty but was a marginal underperformer in comparison with the Nifty Banking index which gave a return on 73% in FY21.
How HDFC Bank Fared in FY21
HDFC Bank’s total income for the year ended March 31, 2021, stood at Rs 146,063 crore as against Rs 138,073.5 crore for the year ended March 31, 2020. The bank’s net profit for the year ended March 31, 2021 was Rs 31,116.5 crore, up 18.5% over the year ended March 31, 2020.
Key highlights of HDFC Bank for FY21
- 123 branches added to boost retail growth in FY21
- Best-in-class deposit franchise (<4% deposit cost) supporting 4.2% NIMs
- Total deposits as of March 31, 2021 were ₹ 1,335,060 crore, an increase of 16.3% over
March 31, 2020.
- CASA deposits grew by 27.0% with savings account deposits at Rs 403,500 crore and current account deposits at ₹ 212,182 crore.
- Gross non-performing assets were at 1.32% of gross advances as on March 31, 2021, as against 1.38% (proforma approach) as on December 31, 2020 and 1.26% as on March 31, 2020.
- Net non-performing assets were at 0.40% of net advances as on March 31, 2021.
The road ahead for HDFC Bank
HDFC Bank has been a consistent performer and wealth compounder for several years now.
Substantial investment in technology and increase in rural penetration will allow the bank to grow its loan book further. Focus on business growth with strong revival in retail advances remains positive. With its robust asset quality performance due to stringent underwriting standards and healthy deposit franchise, HDFC Bank will continue to deliver a steady performance over the coming years.
SBI is the largest state-owned banking and financial services company in India. The bank not only provides banking services to customers but also a range of financial services through its subsidiaries such as life insurance, merchant banking, mutual funds, credit card, security trading, pension fund management and primary dealership in the money market.
Performance of SBI Stock in FY21
In FY21, SBI gained 85%, while Nifty gained 71%. SBI not only outperformed the Nifty but also outperformed the Nifty Banking index which gave a return on 73% in FY21.
How SBI Fared in FY21
Key highlights of SBI for FY21
- Net Profit for FY21 increased by 40.88% YoY at Rs. 20,410 crores as against Rs. 14,488 crores in FY20.
- Total Deposits grew at 13.56% YoY
- Domestic Credit Growth stood at 5.67% YoY
- Home loan, which makes up 23% of Bank’s domestic advances, increased by 10.51% YoY.
- Net NPA ratio decreased 73 bps YoY at 1.50%.
- Gross NPA ratio decreased 117 bps YoY at 4.98%.
- Capital Adequacy Ratio improved by 68 bps YoY to 13.74% as on Mar 2021.
- Return on Assets (RoA) increased by 10 bps YoY from 0.38% in FY20 to 0.48% in FY21.
The road ahead for SBI
Despite intense competition from private sector banks and other state-owned banks, SBI has managed to ensure sustained market share in deposits over the last few years. This has helped SBI to maintain its funding cost competitiveness. Apart from this, the bank has improved its market share in retail loans without sacrificing on the asset quality. SBI’s focus on improving digital capabilities has helped the bank do well in payment market share as well as quicken digital loan sourcing. All these steps have helped the bank to increase its market share considerably over the last few years.
With its massive offline presence, booming digital footprint, the way ahead for SBI looks very promising in the coming years.
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