ICICI Bank and HDFC bank started in the 1990s have surpassed many public sector banks in terms of
- Service
- Reach
- Market Capitalization
Let us look into the performance of stocks of these banks over a period of 5-year and since listing
Stock Performance in the Past 5-Years
Stock Performance Since Listing
Observation:
- HDFC Bank has returned 25k% returns since listing
- In the past 5-years, when the world has seen upheavals and issues linked to inflation, macro-economic stability, pandemic, bad loans, etc. – the bank has been able to stably grow its earnings and its footprint across India
- The Bank has invested heavily in digitizing its services to enable customer convenience
- The Bank has pledged to adopt fintech solutions that can solve problems in the real world
- HDFC – HDFC Bank is set to undergo a merger in the next 12–24 months (depending on approvals) to become a combined entity that will offer services across various sectors. The new entity will be a behemoth that will be able to garner a larger market share as it now combines efficiency, technology, and scale.
Stock Performance in the Past 5-Years
Stock Performance Since Listing
Observation:
- ICICI Bank has returned 18k% returns since listing
- In the past 5-years, the bank was rocked with Non-Performing Assets(NPAs), Nepotism, and other charges but with sheer professionalism, the bank has been able to absolve itself through the brutal carnage
- ICICI Bank has been a leader in the online banking space since it launched its mobile app in the late 2000s
- Using technology to bridge human limitations aided the bank to provide seamless service to its customers despite the lockdown during the Covid-19 pandemic
Based on the observations, the following can be stated for an investor looking to invest in the bank shares over a horizon exceeding 48–60months:
- With the merger synergy, HDFC Bank will be able to create more value for its customers and thereby generate higher profits. This will surely reflect in the stock price going ahead
- With ICICI Bank going with tech first approach and having a gamut of entities like ICICI Prudential, ICICI Securities, ICICI Lombard, etc. supporting the ecosystem seamlessly, the bank is set to gain a foothold among urban and rural customers alike. This will reflect in terms of higher loan disbursal, Insurance Selling, Asset Management, etc. Owing to this, the bank is set to grow much faster than in the last decade
With this insight, it is better to nibble on these bank stocks whenever there is a correction. These stocks will outperform the Nifty 50 and generate wealth for its holders.
Hope this helps
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Happy Investing!!
References:
Lateral Thinking 
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