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HDFC Bank vs SBI Bank – Which bank has bright prospects?

06 March 20246 mins read by Angel One
SBI showed an increase in revenue but a decline in PAT, while HDFC Bank demonstrated robust growth in both revenue and profitability.
HDFC Bank vs SBI Bank – Which bank has bright prospects?
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Amidst a landscape of global uncertainties including geopolitical tensions, financial constraints, and environmental challenges, the Indian economy stands resilient and poised for growth. With the International Monetary Fund (IMF) revising India’s GDP growth forecast to 6.7% for the fiscal year 2024, optimism permeates the economic horizon.

Notably, both HDFC Bank and State Bank of India (SBI), two behemoths in the Indian banking sector, find themselves at the heart of this economic narrative. As deposit growth rebounds and credit momentum gains traction across vital sectors such as agriculture, MSME, and services, these banking giants play pivotal roles in facilitating financial intermediation.

Against the backdrop of a projected gross tax-to-GDP ratio touching a 16-year high at 11.7% and a buoyant GDP outlook, the stage is set for an insightful comparison between HDFC Bank and SBI, delving into their strategies, performances, and contributions to India’s economic trajectory.

Comparing the financials

When comparing the financial metrics of State Bank of India (SBI) and HDFC Bank for the third quarter of fiscal year 2024 (Q3FY24) to the same quarter in fiscal year 2023 (Q3FY2023), several significant trends emerge.

  1. Revenue and Profitability:SBI’s revenue increased notably from Rs 86,616 crore in Q3FY2023 to Rs 1,06,734 crore in Q3FY24, indicating robust growth. However, its profit after tax (PAT) declined from Rs 14,205 crore to Rs 9,164 crore. On the other hand, HDFC Bank experienced a substantial surge in both revenue and PAT, with revenue rising from Rs 33,620 crore to Rs 71,770 crore, and PAT increasing from Rs 12,259.50 crore to Rs 17,160 crore. This signifies strong financial performance for HDFC Bank in Q3FY24.
  2. Net Interest Income (NII): Both banks witnessed an increase in NII, with SBI’s NII growing from Rs 38,069 crore to Rs 39,816 crore and HDFC Bank’s NII increasing from Rs 22,990 crore to Rs 28,470 crore. This suggests an expansion in their interest-earning assets and effective management of interest expenses.
  3. Asset Quality: SBI’s Gross Non-Performing Assets (GNPA) ratio decreased marginally from 3.14% to 2.42% from Q3FY2023 to Q3FY24, while HDFC Bank’s GNPA ratio also decreased from 1.23% to 1.26%. Similarly, SBI’s Net Non-Performing Assets (NNPA) ratio decreased from 0.77% to 0.64%, indicating an improvement in asset quality. HDFC Bank’s NNPA ratio remained stable at 0.33%. These reductions reflect the banks’ efforts in managing and resolving non-performing loans.
  4. Deposits and Advances: Both banks witnessed growth in deposits and advances. SBI’s gross advances increased from Rs 31,33,565 crore to Rs 35,84,252 crore, and deposits increased from Rs 42,13,557 crore to Rs 47,62,221 crore. HDFC Bank also experienced growth in advances from Rs 15,06,800 crore to Rs 24,69,300.00 crore and deposits from Rs 17,33,200 crore to Rs 22,14,000 crore. This indicates confidence among customers in both banks, resulting in increased deposits and lending activities.
  5. CASA Ratio and PCR: SBI’s Current Account Savings Account (CASA) ratio remained stable at around 52%, while HDFC Bank’s CASA ratio slightly increased from 44% to 38%. The Provision Coverage Ratio (PCR) for SBI remained high at 91.52% in Q3FY24, indicating a robust provisioning against potential loan losses. HDFC Bank’s PCR stayed at 73%. These ratios reflect the banks’ prudential measures in managing risks associated with their loan portfolios.
  6. Net Interest Margin (NIM) and Return on Assets (ROA): SBI’s NIM slightly decreased from 3.29% to 3.28%, whereas HDFC Bank’s NIM decreased from 4.10% to 3.40%. Similarly, SBI’s ROA decreased from 1.12% to 1.51%, while HDFC Bank’s ROA declined from 0.56% to 0.49%. Despite the slight decline, both banks maintained healthy margins and returns, signifying operational efficiency and profitability.

In summary, both State Bank of India and HDFC Bank exhibited positive growth in key financial metrics, including revenue, NII, asset quality, deposits, and advances, during Q3FY24. While SBI showed an increase in revenue but a decline in PAT, HDFC Bank demonstrated robust growth in both revenue and profitability. Asset quality improved for both banks reflected in the reduction of GNPA and NNPA ratios.

Additionally, prudent risk management practices were evident through stable CASA ratios and high PCR. Despite slight declines in NIM and ROA, both banks maintained healthy margins and returns, indicating resilience amid challenging market conditions.

Stock price performance

Over the past year, the stock price performance of the State Bank of India (SBI) and HDFC Bank has shown contrasting trends. SBI’s stock has seen a positive return of 37.61%, indicating an upward movement in its stock price. On the other hand, HDFC Bank’s stock experienced a decline of -11.35% over the same period, signifying a decrease in its stock price.

About HDFC Bank Ltd

HDFC Bank Ltd provides banking and financial services across India and international markets, offering a range of products such as savings accounts, loans, cards, and investment options. With operations segmented into Wholesale Banking, Retail Banking, and Treasury Services, it caters to diverse needs including personal, business, and corporate banking, emphasizing customer-centricity and innovation.

About State Bank of India Ltd

State Bank of India Ltd serves a broad customer base, offering banking solutions to individuals, businesses, and institutions domestically and globally. Its product suite includes personal and corporate banking services, loans, investments, and digital banking solutions. With a rich history dating back to 1806, SBI continues to evolve, providing comprehensive financial services while maintaining a strong presence in India’s banking landscape.


In conclusion, the comparison between HDFC Bank and the State Bank of India (SBI) illustrates the dynamic landscape of the Indian banking sector amidst a backdrop of global uncertainties. Despite facing varying challenges, both banks have showcased resilience and adaptability, with positive growth across key financial metrics in the third quarter of fiscal year 2024.

While HDFC Bank exhibited robust revenue and profitability, SBI demonstrated improvement in asset quality and sustained growth in deposits and advances. The contrasting stock price performance further underscores the complexities within the market environment. Moving forward, a deeper understanding of their strategies, performances, and contributions will be essential for stakeholders to navigate the evolving landscape and capitalize on emerging opportunities within the banking sector.

Regarding future prospects, SBI has favourable prospects due to the increasing boom of PSU banks. However, one cannot ignore the recent decline in the price of HDFC Bank. As one of the biggest banks in India, HDFC Bank is now 18.7% below its 52-week high price presenting potential undervaluation

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.

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