Best Banking Stocks in September 2025: Indian Bank, Union Bank & More on 5Y CAGR Basis

The banking sector continues to be one of the strongest pillars of India’s economy, offering investors both stability and long-term growth opportunities. In 2024, total assets in the public and private banking sectors stood at ₹16,128,080 crore (US$ 1,861.72 billion) and ₹1,09,52,458 crore (US$ 1,264.28 billion), respectively. In this article, find the best banking stocks in September 2025, based on 5yr CAGR.

Best Banking Stocks in September 2025 – 5yr CAGR Basis

Note: The best banking stocks in September 2025 listed here are as of September 1, 2025. The stocks are picked from Nifty 500 universe and positive 1-yr returns. They are sorted by 5yr CAGR.

Overview of Best Banking Stocks in September 2025

1. HDFC Bank Ltd

HDFC Bank Limited is an Indian banking and financial services company. In Q1 FY26, the company reported net revenue of ₹531.7 bn, reflecting a 20.6% QoQ increase from ₹441.0 bn in Q4 FY25 and a 31.2% YoY rise from ₹405.1 bn in Q1 FY25. Profit after tax stood at ₹181.6 bn, up 3.1% QoQ compared to ₹176.2 bn and 12.2% YoY compared to ₹161.7 bn.

Key Metrics:

• ROE: 14.05%
• ROCE: 5.70%

2. ICICI Bank Ltd

ICICI Bank provides a wide range of financial products and services catering to retail, SME, and corporate clients. In Q1 FY2026, ICICI Bank reported a 15.5% year-on-year growth in profit after tax, reaching ₹127.68 billion. The bank’s core operating income rose to ₹288.99 billion, reflecting an 11.4% increase compared to Q1 FY2025.

• ROE: 17.04%
• ROCE: 7.24%

3. Kotak Mahindra Bank Ltd

Kotak Mahindra Bank is a diversified financial services institution that offers an extensive range of banking and financial solutions. In Q1FY26, Kotak Mahindra Bank reported a net total income of ₹10,339 crore, up 6% year-on-year from ₹9,771 crore in Q1FY25, but slightly lower than ₹10,466 crore in Q4FY25. However, its profit after tax (PAT) declined 7% YoY to ₹3,282 crore, compared to ₹3,520 crore in the same quarter last year and ₹3,552 crore in the previous quarter.

• ROE: 15.39%
• ROCE: 7.51%

4. Union Bank of India Ltd

Union Bank of India is involved in providing a broad spectrum of services, including banking operations, government business, merchant banking, agency services, insurance, mutual funds, and wealth management, among others. The bank’s net profit rose by 11.87% year-on-year in Q1FY26, while its interest income recorded a YoY growth of 3.53% during the same period.

• ROE: 17.05%
• ROCE: 11.59%

5. Indian Bank

Indian Bank, established in 1907, is a medium-sized bank that provides deposits, loans, and various services. The bank reported a performance in Q1FY26, with net profit rising 23.69% YoY to ₹2,973 crore in June 2025, compared to ₹2,403 crore in June 2024. The bank’s net interest income (NII) also registered a growth of 2.93% YoY, increasing to ₹6,359 crore in June 2025 from ₹6,178 crore in June 2024.

• ROE: 17.09%
• ROCE: 10.53%

Also Read: Best Liquor Stocks in September 2025! 

Conclusion

The banking sector continues to remain a crucial pillar of India’s financial system, with steady growth supported by rising credit demand and digital transformation. However, factors such as regulatory changes, interest rate movements, and asset quality trends can influence performance. Investors must carefully evaluate individual banks on parameters like financial health, earnings growth, and risk management practices before making investment decisions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.