Which Indian banking stock will win in 2025: The legacy lender or the digital disruptor
In the fast-paced Indian banking environment, HDFC stock and ICICI Bank stock are key private sector players with strengths and market approaches. For investors who want to make well-informed choices, an in-depth examination of their financials, growth patterns, and market standings is critical.
Financial Performance and Growth
HDFC Bank has recorded steady growth in its deposit base. As of March 31, 2025, the bank’s deposits rose 5.9% to ₹27.15 trillion. Low-cost current and savings account (CASA) deposits grew by 8.2%. Gross advances also rose 4% to ₹26.44 trillion. This trend is a testament to HDFC Bank’s strategic emphasis on building its deposit base to finance lending capabilities, especially after it merged with parent HDFC in July 2023.
ICICI Bank, however, posted a 14.8% growth in standalone net profit for the fourth quarter of 2024 at ₹117.92 billion. This was driven by good loan growth and a 9.1% jump in net interest income to ₹203.71 billion. Loans grew 13.9%, and deposits rose 14.1%. The bank saw its lending margins drop marginally to 4.25%.
Stock Performance and Market Position
On April 9, 2025, HDFC Bank’s stock price was at ₹1,769.1, and ICICI Bank’s stock price was at ₹1,299.3. On a year-to-date basis for 2024, ICICI Bank performed better compared to HDFC Bank, with the stock rising more than 33%, as against HDFC Bank’s increase of about 9%. This reflects strong market confidence in ICICI Bank’s growth in that specific time.
Analyst Insights and Recommendations
Analysts have provided varied views on these banking majors. Bernstein favors HDFC Bank for long-term investment as the bank has made a strong move to enhance profitability and financials. Although the RoA is higher at 2.4% and loan growth is much faster for ICICI Bank, HDFC Bank’s strategic play will bring in better returns in the long term.
Some analysts highlight ICICI Bank’s strong performance metrics, suggesting it may offer higher short-term returns due to its solid profitability and market positioning.
Strategic Initiatives and Future Outlook
HDFC Bank is aggressively trying to grow its loan securitization business to address increasing investor appetite and control its balance sheet. The move is part of the bank’s overall goals, such as lowering its loan-to-deposit ratio, which rose after the merger with HDFC.
ICICI Bank has been at the forefront of Indian wealth management, fueled by strong asset growth and digital innovation. The bank registered total assets of US$300 billion, up 18.43% compared to the corresponding period last year, with assets under management growing by 12% to US$67 billion.
Conclusion
Both HDFC Bank and ICICI Bank offer sound investment options with different strengths. HDFC Bank’s focus on deposit expansion, merger strategy, and securitization of loans puts it in a better position for long-term investors aiming for stability and steady appreciation. On the other hand, ICICI Bank’s strong profit expansion, leadership in asset management, and market performance might attract investors seeking potentially faster short-term growth.
Investors are advised to make their selection according to their respective investment goals, risk appetite, and horizon. Performing proper due diligence and seeking advice from financial advisors can also help in making the right investment choice.
