HDFC Bank vs SBI: Which Bank Scores Higher in Q1 FY26 Report Card?

The recent bonus issue by HDFC Bank has sparked a fresh debate among investors: Should they invest in HDFC Bank, the largest private sector bank in India, or SBI, the country’s largest public sector bank? This question comes at a time when global trade tensions, especially between India and the USA, are creating uncertainties for many export-driven sectors.

HDFC Bank Vs SBI Share Price Performance

Looking at the stock market, HDFC Bank has performed better than SBI this year. While HDFC Bank share price has risen by nearly 7%, SBI share price has grown by only 1.2%. This shows that investors are favouring HDFC Bank for now, but other factors need to be considered for long-term investments.

Key Financial Indicators for HDFC Bank Vs SBI in Q1 FY26

A closer look at the June 2025 quarter (Q1 FY26) shows differences in important banking numbers:

• Net Interest Margin (NIM): NIM indicates how well a bank earns from its lending activities. SBI’s domestic NIM fell to 3.02% from 3.35% a year ago. HDFC Bank’s NIM also dropped but remained higher at 3.5%, down from 3.7%.
• Loan Growth: SBI’s total advances grew 11.6% year-on-year to ₹42.5 lakh crore. Its SME loans grew strongly by 19.1%. HDFC Bank’s advances grew 6.7% to ₹26.28 lakh crore, with a 17.1% rise in small and mid-market loans.
• Asset Quality (NPAs): Both banks maintained good asset quality. SBI’s net Non-Performing Assets (NPAs) were 0.47%, improved from 0.57%. HDFC Bank’s net NPAs were also 0.47%, slightly higher than last year’s 0.39%.
• Profitability: SBI’s net profit grew by 12.5% to ₹19,160 crore, while HDFC Bank’s net profit increased by 12.2% to ₹18,155 crore.
• Return on Assets (RoA): This is an important measure of profitability. HDFC Bank’s RoA annualised was 1.92%, much higher than SBI’s 1.14%.

Comparing Valuation and Risks of HDFC and SBI Share Price

Currently, SBI trades at a lower Price-to-Earnings (P/E) ratio of 9.5, while HDFC Bank trades at nearly 20 times its estimated earnings for FY26. This means SBI’s stock is cheaper compared to HDFC Bank’s, but the latter commands a premium due to better profitability and growth metrics.

Read more: DA Hike: What Does the Rising AICPI-IW Mean for Central Government Employees?

Conclusion

Both SBI and HDFC Bank have their strengths. SBI offers higher loan growth and a cheaper stock price, while HDFC Bank shows better profitability and asset quality. For long-term investors, HDFC Bank may be the preferred choice due to its superior returns and stability, but SBI’s strong loan growth and lower valuation make it attractive for value-focused investors. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or 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 securities are subject to market risks. Read all related documents carefully before investing.