SBI vs HDFC Bank stock COMPARISION: PSU vs Private - Which bank share offers better investment opportunity

April 18,2024

SBI vs HDFC Bank: The health of banks and the state of a country's economy are intricately intertwined. Banks serve as the cornerstone of a nation's financial infrastructure, facilitating the flow of capital, credit, and liquidity throughout the economy.

Indian banks currently are standing at an unusual junction wherein shares of private banks have underperformed public banks, and by a huge margin.

Looking at the Nifty PSU Bank and Nifty Private Bank indices, we can see that the difference in valuations between public and private sector banks has decreased in recent months, and by a huge margin.

While the PSU Bank index has gained over 21 per cent so far in 2024, the Private Bank index has declined by 4.41 per cent. In the past one year, PSU Bank index has seen a staggering 76.20 per cent growth, while Private Banks have gained only as much as 11.05 per cent. Looking at a longer time frame, 5 years, PSU Bank index has experienced a growth of 120.31 per cent, while the Private Bank index lagged behind by a huge margin, surging a modest 39.25 per cent.

Clearly, shares of PSU Banks have outperformed Private Banks in the recent quarters.

SBI vs HDFC Bank: Stock Performance Comparison

The dilemma about investing in private or public sector banks for better long term returns has always remained a hot topic among investors. Against this backdrop, let's examine which stock between banking giants HDFC Bank and State Bank of India (SBI) offers better prospects in the long run.

  • In the last one year, SBI has outperformed HDFC Bank by a huge margin. While shares of HDFC Bank declined 8.89 per cent in this period, SBI's shares grew by an impressive 37.91 per cent. In Comparison, benchmark Nifty Bank advanced 12.35 per cent in the last one year.
  • Year-to-date (YTD), the returns of both stocks moved in opposite directions. SBI gained 17.38 per cent in the ongoing calendar year, while HDFC Bank gave a negative return of 10.96 per cent. In comparison, the Nifty Bank index declined 1.55 per cent in 2024 YTD.
  • Currently trading at Rs 751.70, SBI is now around 5.25 per cent away from its 52-week high of Rs 793.40, hit on March 7, 2024, whereas it has risen 42.36 percent from its 52-week low of Rs 528, hit on April 17, 2023.
  • Currently trading at Rs 1509.25, HDFC Bank is now around 14.13 per cent down from its 52-week high of Rs 1,757.50, hit on July 3, 2023, whereas it has added 10.68 per cent from its 52-week low of Rs 1,363.55, made on February 14, 2024.
  • In the long term, 5 years, SBI has emerged as the winner. The stock has given a multibagger return of 141 per cent while HDFC Bank has delivered a return of just 35.58 per cent.

SBI vs HDFC Bank: Q3 FY24 Earnings Performance

SBI Q3 Results 2024 Highlights:
  • Net Profit: Standalone net profit declined by 35 per cent YoY to Rs 9,164 crore from Rs 14,205.34 crore in the previous year.
  • Net Interest Income (NII): NII for rose by 4.59 per cent YoY to Rs 39,816 crore from 38,069 crore in the previous year.
  • Operating Profit: Operating profit stood at Rs 20,336 crore versus Rs 25,219 crore in the previous year, down 19.36 per cent.
  • Return Ratios: Q3FY24 Return on Assets (RoA) stood at 0.62.
  • Credit Growth: Credits grew by 14.38 per cent YoY.
  • Deposit Growth: Total deposits grew by 13.02 per cent YoY, with CASA deposits growing by 4.48 per cent YoY.
  • CASA Ratio: 41.18 per cent as of December 31, 2023.
  • Asset Quality: Gross Non-Performing Assets (GNPA) ratio for Q3FY24 stood at 2.42 per cent (improved by 72 bps YoY), Net NPA ratio stood at 0.64% (improved by 13 bps YoY), while Provision Coverage Ratio (PCR) at 74.17 per cent declined by 195 bps YoY.
HDFC Bank Q3 Results 2024 Highlights
  • Net Profit: Standalone net profit rose nearly 34 per cent YoY to Rs 16,372.54 crore from Rs 12,259 crore in the previous year.
  • Net interest income (NII): NII rose 24 per cent YoY to Rs 28,471.34 crore from Rs 22,988 crore.
  • Operating Profit: Operating profit stood at Rs 23,647 crore versus Rs 19,024 crore in the previous year, up 24.3 per cent.
  • Return Ratios: Q3FY24 Return on Assets (RoA) stood at -- per cent. Return on Equity (RoE) stood at -- per cent.
  • Credit Growth: Credits grew by -- per cent YoY.
  • Deposit Growth: Total deposits grew by nearly 28 per cent YoY to Rs 22.14 lakh crore, with CASA deposits growing by 9.5 per cent YoY.
  • CASA Ratio: 38 per cent as of December 31, 2023
  • Asset Quality: GNPA ratio for Q3 FY24 stood at 1.26 per cent, compared to 1.23 per cent a year ago, Net NPA stood at 0.31%, compared to 0.33% a year ago.

SBI has Rs 6,71,041.57 crore market cap, while HDFC Bank has a market cap of Rs 11,46,677.70 crore, as of April 17.