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 the 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 FY22, HDFC Bank stock was an underperformer in comparison with the blue-chip index Nifty. While Nifty gained 17.70% the HDFC Bank stock gave negative 0.27% returns in the same financial year. It was an underperformer against the sectoral index Nifty Bank, too.
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What is Nifty Bank?
Nifty Bank is a curated index of top PSU as well as private banking players listed on NSE. While NIFTY represents the whole stock market in India, Nifty Bank represents the banking sector in India, and it trakcs performance of the best banking stocks. Currently, ten banking stocks form part of the sectoral index Nifty Bank.
How HDFC Bank Fared in FY21
HDFC Bank’s total income for the year ended March 31, 2022, stood at Rs 1,01,519 crore as against Rs 90,084.46 crore for the year ended March 31, 2021. The bank’s net profit for the year ended March 31, 2021 was Rs 36,961.35 crore, up 18.8% over the year ended March 31, 2020.
Key highlights of HDFC Bank for FY21
- 734 branches added to boost retail growth in FY22.
- Best-in-class deposit franchise (<4% deposit cost) supporting 4.2% NIMs.
- Total deposits as of March 31, 2021 were Rs. 15,59,217 crore, an increase of 16.79% over March 31, 2021.
- Savings Accoun Deposits grew by 26.8% to Rs. 5,11,739 crore while Current Account Deposits increased by 12.8% to Rs. 2,39,311 crore.
- CASA Deposits accounted for 48.2% of Total Deposits.
- Gross Non-Performing Assets (GNPAs) stood at at 1.17% of Gross Advances, as against 1.32% in the previous year. Net NPA ratio stood at 0.32% as against 0.40% in the previous year.
The road ahead for HDFC Bank
HDFC Bank has been a consistent performer and wealth compounder for several years now. Substantial investment in technology will allow the bank to grow its share in the industry further. The bank is focused on modernising the core. 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 an array 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 FY22, SBI gained 35%, while Nifty gained 17.70%. SBI not only outperformed the Nifty but also outperformed the Nifty Banking index which gave a return on 7.31% in FY22.
How SBI Fared in FY21
Key highlights of SBI for FY21
- Net Profit for FY21 increased by 55.20% YoY at Rs. 31,676 crores as against Rs. 20,410 crores in FY21.
- Total Deposits grew by 10.06% YoY to surpass the Rs. 40 lakh crore mark of which domestic deposits grew by 9.80% to 39.20 lakh crore
- Bank’s advances/loans grew by 11% to Rs. 28.18 lakh crore compared to 4.8% growth in FY21. Of the total advacnes, domestic business grew by 15.42%, retail personal loans being at the forefront.
- Home loans and unsecured personal loans increased by 11.49% and 28.50% respectively YoY.
- Investment portfolio rose by 9.6% to Rs. 14.93 lakh crore in FY22.
- Bank declared a dividend of Rs. 7.10 per equity share, which 710% of the face value.
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.
The bank is opportune to undertake the required transformation with an eye on emerging trends in the Indian banking sector. SBI will continue to promote its digital agenda on front as well as back offices. The bank is well-placed in terms of growth capital in the current year. With the launch of PLI schemes, Stake bank of India is looking to explore lending to new sectors like electric mobility and renewables.
Owing to its massive offline presence, booming digital footprint, the way ahead for SBI looks very promising in the coming years.