For the first time, ICICI Bank has overtaken HDFC Bank in terms of valuation. This is due to the recent rally in shares of ICICI Bank. Shares of ICICI Bank have risen 30 per cent in the last one year.
Investors have shown great interest in this stock. Both ICICI and HDFC are private banks in the country.
ICICI Bank’s stock was trading at 3.30 times its book value on April 20 on a 12-month trailing basis. Shares of HDFC Bank were trading at three times that. However, there is not much difference in valuation based on the book value of the two banks. Secondly, HDFC Bank is far ahead of ICICI Bank in terms of market capitalization.
ICICI Bank has a market cap of Rs 5.25 lakh crore. HDFC Bank has a market cap of Rs 7.5 lakh crore. However, for the first time, ICICI Bank’s stock has overtaken HDFC Bank’s by a significant factor of valuation.
ICICI Bank Balance Sheet
ICICI Bank has worked hard to improve its position. The bank has made its balance sheet very clean. The bank has increased its share of retail rather than corporate in its loan portfolio. ICICI Bank’s provision coverage ratio stood at 80 per cent in the December quarter of FY2021-22, the highest in the industry. Five years ago, the ratio was 54 percent.
Growth in net interest income
ICICI Bank has shown good growth in its net interest income for the financial year 2020-21 despite the Corona epidemic. The first quarter of the last financial year also saw good growth in net interest income.
Which supports the bank’s operating growth. The volatility seen in its net profit growth over the last few years is over. Credit costs have fallen, and returns on equity have skyrocketed. Its corporate loan growth has also been good.
Doubts about ICICI Bank’s top management and corporate governance are also being dispelled. ICICI Bank suffered a major setback in 2018 when news of the bank’s former CEO Chanda Kochar’s involvement in a scam surfaced.
Chanda Kochhar had to resign in October 2018. Which was later taken over by Sandeep Bakshi. He has transformed the bank in just a few years.