A Dive into Public and Private Sector Banking Fundamentals

A Dive into Public and Private Sector Banking Fundamentals

The banking system in India has evolved over several decades and is well-established, serving the credit and banking needs of the economy. The banking ecosystem is providing impetus to the economic growth and development of the country and catering to the specific and varied financial requirements of different customers and borrowers. This industry is strengthened by every village having at least one banking branch or business to serve intermediate resources from the depositor to the lender for their mutual benefit.

Industry Overview

The Indian banking sector plays a crucial role in facilitating credit, investment, and infrastructure for individuals, companies and small enterprises. In this sector, mobile banking is rapidly increasing.

The RBI is the primary regulator in India. The Indian banking market is expected to grow in net interest income to Rs. 45,960 crore, and changes will be 4.6%. The traditional banks are dominating with a market volume of Rs. 43,580 crore in FY24.  The net interest income will be growing at a compound annual growth rate of 0.89%, and the market volume is expected to be Rs. 48,050 crore by 2029.

Company Overview


HDFC Bank is established in August 1994 and is the largest private bank in India over last 29 years. It has a market capitalization of more than Rs 12 Lakh Crore. It is India’s 3rd largest market capitalization and the 7th most valuable bank in the world. HDFC Bank is one of the world’s top 100 banking companies by total assets. In India, it was the second-largest bank in terms of assets. HDFC has reported a workforce totaling 1,77,000 employees.

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HDFC Bank has three key business segments such as retail banking, wholesale banking, and Treasury services. The retail banking segment provides services to individuals, salaried professionals, and micro and small businesses for providing loan products, accounts and deposits, and other services like debit and credit cards, etc. 

The Wholesale Banking segment provides services to large corporations, Multinational corporations, and public-sector enterprises for providing loans like term lending, export finance, investment banking, and other services like forex & derivatives, cash management and letters of credit, etc. The Treasury services manage safeguarding the bank’s cash and liquid assets.

State Bank of India

SBI Bank was the largest public sector bank in India and was established on July 1, 1955. With a legacy of over 68 years, it has a 221st rank in the Fortune Global 500 list of the world’s biggest corporations. SBI was the 47th largest bank in the world by total assets, with an asset base of over INR 61 lakh crores. The company has reported 2,32,296 employees in its 2023 annual report.

SBI serves over 50 crore customers through its vast network of over 22,500 branches, 63,580 ATMs/ADWMs, and 82,900 BC outlets. It has a total user base of over 7.40 crore in YONO. SBI had a market share of 25.04% in debit card spending and transactions of more than 65 crore in FY24. In mobile banking transactions, SBI has a 26.81% market share.


SBI has expanded its operations through various subsidiaries, including SBI General Insurance, SBI Life Insurance, SBI Mutual Fund, and SBI Card. It has a global presence and operates across time zones, with 241 offices in 29 countries. In Personal Banking, SBI is the market leader in education loan providers and personal loan providers. It has given home loans to 29.46 lakh customers.

In Rural Banking, SBI is the market leader in agriculture gold loans and loans to SHGs. In SME Banking, its portfolio has crossed Rs. 4 lakh crore and customers of around 20 lakhs. It had 864 SME-intensive branches in India. In Corporate Banking,  its portfolio is 11.38 lakh crore. It provides a YONO business platform as well.

HDFC Bank Vs SBI Bank – Financial Analysis

Net Interest Income and Net Profit

HDFC Bank’s and SBI Bank’s net internet income has been increasing for the last 5 years. HDFC Bank’s net interest income increased from ₹86,842 crores to ₹1,08,530 crores in FY24 and grew by 24.97%. In SBI Bank, it increased from ₹1,44,841 crores to ₹159876 crores and grew by 10.38%. In comparison, HDFC Bank is growing faster than SBI Bank. The net interest income growth of the CAGR of HDFC and SBI is to be 17.89% and 12.99%, respectively. In CAGR, HDFC also has a greater percentage compared to SBI.

HDFC and SBI Bank’s net profit has been increasing for the past 5 years. In FY24, the net profit of HDFC Bank surged from ₹44,109 crores to ₹60,810 crores and grew by 37.86%. SBI’s net profit has increased from ₹50,232 crores to ₹61,077 crores and grew by 21.59%. In comparison, HDFC is growing faster than SBI Bank. The net profit growth of the CAGR of HDFC and SBI is to be 23.36% and 43.29%, respectively. In CAGR, SBI has a greater percentage compared to HDFC.

Net Interest Margin and Net Profit Margin

HDFC Bank NIM has decreased by 12.53%, from 3.67% in FY23 to 3.21% in FY24. SBI Bank NIM has declined from 3.37% to 3.28% in FY24. It dropped by 2.67%. SBI Bank NIM is consistent as compared to HDFC Bank NIM. 

The NPMs of both banks increased until 2023. HDFC Bank NPM in FY24 was 23.07%, compared to 27.02% in FY23. SBI Bank NPM decreased from 15.12% to 14.71% in FY24. SBI is more consistent in YOY growth compared to HDFC Bank. However, HDFC Bank’s net profit margin is the highest compared to SBI.

Return Ratios

The return on equity of HDFC bank has declined from 17.4% in FY23 to 16.1% in FY24. However in the case of SBI, ROE has increased from 19.43% to 20.32% in FY24. When compared, SBI has a better ROE compared to HDFC Bank.

Meanwhile, HDFC Bank’s return on assets is 2% in FY24. It has been constant for the last 3 years. The ROA of SBI has increased from 0.96% in FY23 to 1.04% in FY24. In comparison, HDFC has a better ROA compared to SBI Bank.

Gross NPA and Net NPA

HDFC Bank and SBI Bank’s gross NPA in FY24 was 1.24% and 2.24%, respectively, compared to 1.12% and 2.78% in FY23. HDFC Bank and SBI Bank’s net NPA in FY24 were 0.33% and 0.57%, respectively, compared to 0.27% and 0.67% in FY23. 

SBI Bank’s gross NPA and net NPA have improved over the last 5 years. HDFC Bank’s gross NPA and net NPA have been constant over the years. These ratios are crucial to indicating the overall health of a bank’s loan portfolio and its ability to manage credit risk. High levels of NPAs suggest potential financial instability, which can impact a bank’s profitability, lending capacity and investor confidence.

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HDFC Bank Vs SBI Bank – Financial Metrics

Some of the key financial metrics of HDFC and SBI bank are given below.

HDFC Bank Vs SBI Bank – Future Plans


  • HDFC Bank has to capitalize on new growth opportunities through its merger with HDFC Ltd. It will help with mortgaging assets, improving cross-selling, and accelerating growth in liabilities.
  • HDFC Bank plans to open almost 1,000 new branches in 2024. Further set up a total of more than 13,000 branches in the upcoming 3-5 years.
  • The HDFC bank plans to double its commercial and rural banking portfolio in the next 3 years, backed by its strong distribution network and expanding branch presence.
  • Focus on improving profitability metrics like return on asset and earnings per share over the medium to long term (2-3 years)
  • HDFC bank aims to strengthen its digital capabilities, modernize its infrastructure and establish centers of excellence to adapt to the digital era and drive technological advancements.

SBI Bank

  • SBI Bank will sign with German Development Bank KFW to support solar photovoltaic projects in India. The deal value will be around  630 crores (70 million euros).
  • SBI Bank aims to net zero emissions, with at least 7.5% of domestic gross advances being green advances.
  • SBI Bank has contributed to society through long-term projects such as Gram Seva, SBIF Conserw, SBIF Ace, SBIF Jivanam, and Women Empowerment.
  • SBI Bank aims to open 300 new branches across India in 2024 to expand its physical presence.
  • SBI Bank accelerates to expand the digital scope and reach of its super app YONO with enhanced user experience. It also partners with fintech firms and NBFCs to increase penetration.

Target Price


  • AXIS Securities has set a target price of Rs. 1685 in 6-9 months. According to securities, HDFC has a reasonable valuation, a stronger branch network, and a larger customer base that provides healthy growth opportunities.
  • ICICI Direct has announced a target price of Rs. 1850. They say HDFC has stable asset quality across cycles and focuses on deposit accretion to help improve LCR.
  • Brokerage Systematix has given a target price of Rs. 1885. HDFC Bank has improved profitability metrics, expanded its retail deposit franchises, and invested in its workforce and technology.

SBI Bank

  • AXIS Securities has announced the target price of SBI will be ₹1,010. They believe that SBI will remain the best player in PSU banks. It has strong PCR, adequate capitalisation and an improved asset outlook.
  • ICICI Direct has given a target price of Rs. 1000 for one year holding. According to ICICI, the SBI has improved in the quarterly results for Q4 of FY24. Its profit was higher than estimated.


We are in the last part of the conclusion on HDFC Bank Vs SBI Bank, we saw the key financial indicators of the bank such as net interest income and net profit margin, return ratios of ROE and ROA, and gross and net NPA. It will help to compare the financial performance of HDFC Bank and SBI Bank.

HDFC is the leading bank in the private sector. It has shown robust revenue growth and profitability. SBI Bank is the leading bank in the public sector. It has improved asset quality and sustained growth in deposits and advances. Both banks have favorable potential for the future growth of the Indian banking industry.

What do you think about HDFC Bank and SBI Bank? Let us know in the comments below.

Written By Nikhil Naik

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