HDFC Bank vs Icicibank Q1 FY24

HDFC Bank reported a strong Q1 FY24 with net profit of INR 11,952 crore (+30% YoY) and net revenues of INR 32,829 crore (+26.9% YoY). NII grew 21% to INR 23,599 crore, with NIM at 4.1%. Advances grew 20% YoY (gross of IBPC) and deposits grew 19.2% YoY, with retail deposits up 21.5%. Asset quality remained stable with GNPA at 1.17% (core 1.03%) and credit cost at 70 bps. The merger with HDFC Ltd was completed on July 1, adding a large mortgage book and 4 million customers. Management guided for 17-18% loan growth and ROA in the 1.9-2.1% range. Key risk: deposit market share may face pressure given the large incremental funding requirement from the merged entity's higher credit-deposit ratio.

Guidance read

Loan growth of 17-18% for FY24: Management expects full-year loan growth in the 17-18% range, consistent with historical doubling every 4-5 years. ROA in 1.9-2.1% range: Management reiterated confidence in sustaining ROA between 1.9% and 2.1% on a merged basis. Retail deposit accretion of ~INR 1 trillion per quarter: Management indicated that the capacity built should enable retail deposit accretion of around INR 1 trillion per quarter, though Q1 was seasonally lower.

Risk read

Key risks include Deposit market share loss — QoQ deposit growth was only 1.6% (INR 30,000 crore), significantly below system growth of ~5%, raising concerns about market share loss.; Credit cost reversion to mean — Management is investing aggressively in branches, relying on benign credit costs to fund the investment. If credit costs revert to historical mean (90-110 bps), profitability could be pressured.; High credit-deposit ratio post-merger — The merged entity's credit-deposit ratio is ~109%, well above the bank's historical ~84%. Bringing it down will take 3-4 years and may constrain growth..

Promise ledger

Scorecard data is being built as historical quarters are processed.

ICICI Bank reported a strong Q1 FY24 with PAT up 39.7% YoY to INR 96.48 billion, driven by robust loan growth of 18.1% YoY and NII expansion of 38% YoY. Core operating profit less provisions grew 38% YoY to INR 125.95 billion, supported by healthy fee income and controlled credit costs. NIM compressed sequentially to 4.78% due to lagged deposit repricing, but management expects stabilization in 2-3 quarters. Asset quality improved with GNPA at 0.48% (down from 0.70% YoY). The bank continues to invest in technology and distribution, with employee expenses rising 36.3% YoY. Guidance remains positive on growth, though cost of deposits may rise further. Risk: unsecured loan growth (40.6% YoY) could face regulatory scrutiny if industry stress emerges.

Guidance read

Cost of deposits to increase for next 2-3 quarters: Management expects cost of deposits to continue rising for the next couple of quarters due to repricing of maturing deposits and incremental growth. Continue investing in technology, people, and distribution: The bank will maintain investments in technology, employee hiring, and branch expansion to drive franchise growth. Focus on risk-calibrated profitable growth: Management aims to grow market share across key segments while maintaining prudent provisioning and strong capital levels.

Risk read

Key risks include Unsecured loan growth may attract regulatory action — Rapid growth in personal loans and credit cards (40.6% YoY) could lead to higher NPAs or regulatory risk-weight increases if industry stress emerges.; NIM compression from rising deposit costs — Cost of deposits is expected to rise for 2-3 quarters, pressuring NIMs further before stabilization.; Employee cost growth outpacing revenue — Employee expenses grew 36.3% YoY due to hiring and increments; if revenue growth moderates, operating leverage may be delayed.; Competitive pressure in corporate lending — Pricing pressure in wholesale lending persists, though ICICI Bank focuses on ecosystem-based relationships to maintain returns..

Promise ledger

Scorecard data is being built as historical quarters are processed.