Top 10 Banking Stocks to Buy in India – 2022

Indian Banking Sector:

India’s banking system, according to the Reserve Bank of India (RBI), is adequately capitalized and well-regulated. The country’s financial and economic conditions are significantly superior to those of any other country on the planet. Credit, market, and liquidity risk analyses indicate that Indian banks are generally resilient and have fared well during the global recession.

Recently, the Indian banking market has seen the introduction of novel banking concepts such as payments and small financial institutions. The RBI’s new policies may go a long way toward assisting the domestic banking industry’s reform.

India’s digital payments system has progressed the most rapidly of all 25 countries, with India’s Immediate Payment Service (IMPS) being the only system to achieve a level five ranking on the Faster Payments Innovation Index (FPII).

Indian Banking Size and Growth Potential:

In addition to cooperative credit institutions, the Indian banking system comprises 12 public sector banks, 22 private sector banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks, and 96,000 rural cooperative banks. As of September 2021, India had a total of 213,145 ATMs.

Between FY18 and FY21, bank assets increased across all sectors. Total banking sector assets (public and private sector banks combined) grew to the US $2.48 trillion in FY21.

Assets under management in the public and private banking sectors totaled US $1,602.65 billion and the US $878.56 billion, respectively, in FY21.

Between FY16 and FY21, bank credit increased at a CAGR of 0.29 percent. Total credit granted increased to $1,487.60 billion in FY21. Between FY16 and FY21, deposits increased at a CAGR of 12.38 percent, reaching US $2.06 trillion in FY21.

According to the RBI, bank credit totaled Rs. 110.46 trillion (the US $1.47 trillion) as of September 24, 2021, while credit to non-food businesses totaled Rs. 109.82 trillion (the US $1.46 trillion).

Major Developments in Indian Banking Sector:

As of November 03, 2021, the total number of bank accounts established under the government’s main financial inclusion initiative, the “Pradhan Mantri Jan Dhan Yojana” (PMJDY), had reached 43.81 crores, with deposits in Jan Dhan bank accounts totaling more than Rs. 1.48 trillion (the US $29.89 billion).

The Digital Lenders’ Association issued a revised code of conduct for digital lending in December 2020 in response to the RBI’s cautious message.

In 2019, the banking and financial services sectors saw 32 M&A (mergers and acquisitions) transactions totaling the US $1.72 billion.

In February 2020, the Cabinet Committee on Economic Affairs approved the continuation of the recapitalization process for regional rural banks (RRBs) by providing minimum regulatory capital to RRBs for an additional year beyond 2019–20 – until 2020–21 – to those RRBs that are unable to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 9% as per RBI regulatory standards.

Top 10 Banks in India:

S.No.NameCMPROCE 5YrROE 5YrP/EEV / EBITDAPB X PEPEGDebt / EqInt CoverageROCEROEROICROAEPSInd PEMarket Cap
1HDFC Bank1,564.857.2217.0925.3521.86104.71.277.21.86.3116.476.311.8861.9818.648,67,387.50
2ICICI Bank788.055.578.6725.7621.3989.392.0571.735.7313.115.731.3830.6918.645,47,145.15
3State Bank of India492.404.673.112.9820.9920.641.0815.061.324.538.214.530.5132.119.94,39,447.87
4Kotak Mahindra Bank1,922.157.4713.4638.1826.35171.431.623.852.136.4913.116.492.1650.3818.643,81,222.16
5Axis Bank726.905.195.2322.3121.847.97-7.648.31.44.847.584.840.7532.6418.642,23,145.66
6IndusInd Bank903.957.4212.5518.3515.4529.544.137.091.325.957.335.950.8549.5718.6470,030.81
7Canara Bank211.005-0.558.5218.415.20.33171.165.355.585.350.3126.569.938,287.42
8AU Small Finance1,169.359.622.1432.5218.77193.170.86.971.578.9922.328.992.536.4218.6436,732.52
9Yes Bank14.504.77-8.84-30.63--6.830.633.15-12.63.15-1.3-1.2818.6436,279.57
10Federal Bank90.056.1710.2610.6317.6212.220.3811.181.35.5910.625.590.868.818.6418,939.46
  • ROCE % – Return on Capital Employed in percentage, per-annum.
  • ROE % – Return on Equity in percentage, per-annum.
  • P/E – Price to Earnings ratio.
  • EV/EBITDA – Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization expenses.
  • PEG – Price to Earnings Growth ratio.
  • ROCE 5 Years – Return on Capital Employed in percentage, 5 years average.
  • ROE 5 Years – Return on Equity in percentage, 5 years average.

HDFC Bank

HDFC Bank was founded in 1995 and provides a broad range of banking services, including commercial and transactional banking in the wholesale segment and branch banking in the retail segment, with a particular emphasis on automobile finance, business banking loans, commercial vehicle finance, credit cards, and personal loans. In May 2008, the bank purchased Centurion Bank of Punjab.

It operates three international branches: one in Dubai, one in Bahrain, and one in Hong Kong, as well as two representative offices in the United Arab Emirates and one in Kenya. Additionally, the bank maintains an offshore banking unit located at the International Financial Service Centre (IFSC) in Gandhinagar, Gujarat.

The Housing Development Finance Corporation Limited (HDFC) was one of the first financial institutions to gain “in principle” approval from the Reserve Bank of India (RBI) to establish a private sector bank. HDFC Bank is a publicly-traded banking firm that was founded in August 1994 under the name “HDFC Bank Limited” in Mumbai, India. It operates a variety of banking and financial services businesses, including retail banking, wholesale banking, and treasury activities.

The promoter is HDFC Ltd., which owns 19.32 percent of the company as of September 30, 2020. At the moment, HDFC Bank Ltd. (HBL) is India’s largest private sector bank. The bank’s overall balance sheet size as of March 31, 2020, was Rs. 15,30,511 Cr.

Profit after tax (PAT) was Rs 31,117 crore on a total income (net of interest expense) of Rs 90,084 crore in fiscal 2021, up from Rs 26,257 crore and Rs 79,447 crore in fiscal 2020, respectively. For the quarter ended June 30, 2021, PAT was Rs 7,730 crore on a total income of Rs 23,297 crore (net of interest expenditure), up from Rs 6,659 crore and Rs 19,741 crore in the previous fiscal.

ICICI Bank

ICICI Bank was founded in 1994 by the erstwhile ICICI Ltd. ICICI Ltd was amalgamated with ICICI Bank in 2002. ICICI Bank purchased Bank of Rajasthan in August 2010, expanding its foothold in northern and western India. As of September 30, 2021, the bank had a combined asset base of Rs 16.0 lakh crore and advances of Rs 8.2 lakh crore. On a stand-alone basis, the asset base and advances were Rs 12.8 lakh crore and Rs 7.6 lakh crore, respectively.

As of September 30, 2021, the advance mix was 62% retail loans, 6% business banking, 4% SME, 23% domestic corporate, and 5% international advances.

Profit after tax (PAT) for fiscal 2021 was Rs 16,193 crore, up from Rs 7,931 crore in the previous fiscal. Consolidated profit after tax (PAT) was Rs 18,384 crore in fiscal 2021, up from Rs 9,566 crore in the previous fiscal.

ICICI Bank recorded a standalone profit after tax of Rs 10,127 crore for the six months ended September 30, 2021, up from Rs 6,850 crore in the previous fiscal’s similar period. The bank recorded a PAT of Rs 10,855 crore for the six months ended September 30, 2021, up from Rs 8,000 crore in the previous fiscal’s similar period.

ICICI Bank is a prominent private sector bank in India that offers a diverse range of financial goods and services to individuals, small and medium-sized businesses, and corporations. The bank maintains a comprehensive network of branches, ATMs, and other points of contact.

State Bank of India

SBI is India’s oldest and largest bank. GoI controlled 56.92 percent of the bank’s share capital as of September 30, 2021. To its corporate and retail customers, the SBI group offers a broad range of banking and non-banking goods and services.

As of September 30, 2021, it operated 22,230 branches and 64,122 automated teller machines (ATMs). It operates on a global scale. It provides a broad range of financial services through its non-bank subsidiaries and joint venture enterprises, including investment banking, credit cards, life insurance, general insurance, fund management, primary dealership, broking, and factoring.

SBI declared a profit of Rs 22,405 crore in fiscal 2021, up from Rs 19,768 crore in fiscal 2020. Profit for the first half of fiscal 2022 was Rs 16,670 crore, up from Rs 10,607 crore in the previous fiscal.

SBI declared a profit of Rs 20,410 crore on a standalone basis in fiscal 2021, up from Rs 14,488 crore in fiscal 2020. Profitability was Rs 14,131 crore in the first half of fiscal 2022, up from Rs 8,764 crore in the previous fiscal. The State Bank of India is included in the Fortune 500. It is an Indian multinational corporation and a statutory authority for banking and financial services with its headquarters in Mumbai. It is India’s largest and oldest bank, having existed for over 200 years.

Kotak Mahindra Bank

Kotak Mahindra Bank is a diversified financial services group that offers a broad range of banking and financial services. These include retail banking, corporate and investment banking, investment banking, stockbroking, vehicle finance, advisory services, asset management, life insurance, and general insurance.

KMBL is the Kotak Group’s flagship firm. Kotak Mahindra Finance Limited began operations in 1986 as a bill discounting and leasing nonbank financial company (NBFC), before being converted into a bank in 2003. ING Vysya Bank amalgamated with KMBL on April 1, 2015. KMBL had a network of over 1,604 branches as of March 31, 2021, and its net

Amounts advanced totaled Rs. 2,23,689 crore. In FY2021, it declared a profit after tax (PAT) of Rs. 6,965 crore, up from Rs. 5,947 crore in FY2020.

The Kotak Group is one of the largest financial conglomerates in India, with a substantial presence in securities and investment banking. The group is expanding its banking, asset management, and insurance activities at the moment. It benefits from synergies across its numerous platforms, which span the financial spectrum.

Apart from KMBL, the Kotak Group’s other significant subsidiaries include Kotak Mahindra Prime Limited (auto financing; rated [ICRA] AAA (Stable)/A1+), Kotak Securities Limited (retail and institutional broking and portfolio management services), Kotak Mahindra Investments Limited (commercial real estate lending and securities-based lending; rated [ICRA] AAA (Stable)/A1+), and Kotak Mahindra Capital Company Limited (investment banking (asset management business).

The Kotak Group reported a consolidated profit after tax of Rs. 9,990 crore in FY2021, up from Rs. 8,593 crore in FY2020.

Axis Bank

Axis Bank is India’s third-largest private bank. The bank provides a comprehensive range of financial services to a diverse range of customer groups, including large and mid-sized corporations, small and medium-sized businesses, agriculture, and retail businesses.

Axis Bank Limited is a private-sector bank, founded in December 1993. The bank’s promoter group consists of Life Insurance Corporation of India (LIC) and Specified Undertaking of the Unit Trust of India (SUUTI), which together held 9.75 percent of the shares on September 30, 2021, down from 11.64 percent on March 31, 2021, and 13.88 percent on March 31, 2020.

As of September 30, 2021, Axis Bank had the third-largest branch network among private sector banks, with 4,679 branches and an international presence via branches in Dubai International Financial Centre (DIFC) and Singapore, representative offices in Abu Dhabi, Sharjah, Dhaka, and Dubai, and an offshore banking unit in GIFT City.

IndusInd Bank

IndusInd Bank Limited was founded in 1994 under the Banking Regulation Act of 1949 as a commercial bank. The bank is a publicly-traded company that offers a broad range of banking products and financial services to business and retail clients, in addition to conducting treasury operations. The bank conducts business in India, including at the country’s international financial service centers.

IBL is a new generation private bank, founded in 1994. The bank is a key player in commercial and other vehicle financings, as well as providing working capital loans to businesses. As a result of its high profitability, IBL has consistently raised common equity from the markets at considerable premiums over the last few years. It had a balance sheet of INR3.72 trillion at the end of FY21, with a net profit of INR28.3 billion (FY20: INR44.19 billion). The bank operated a network of 2,015 branches and 2,870 ATMs around the country as of the end of 1QFY22.

Canara Bank

Canara Bank (CB) is a public-sector bank headquartered in Bengaluru. It was founded in 1906. The merger of Syndicate Bank (SB) with Canara Bank became effective on April 1, 2020, pursuant to an order from the Ministry of Finance, Government of India.

Canara Bank is currently the third-largest public sector bank as of September 30, 2021, further enhancing the bank’s strategic relevance. The government of India is the bank’s biggest stakeholder with a 62.93 percent ownership, followed by the LIC of India with an 8.83 percent shareholding as of September 30, 2021. As of September 30, 2021, the bank had 9,800 branches (on a combined basis), with 3,037 in rural areas, 2,796 in semi-urban areas, 1,971 in urban areas, and 1,996 in metro areas.

Additionally, the bank operates four international branches in New York, London, Hong Kong, and Dubai. Mr. Lingam Venkata Prabhakar is the Managing Director and Chief Executive Officer, and he is assisted by a team of Executive Directors and General Managers who oversee several areas. The bank had gross advances of Rs.686,813 crore and deposits of Rs.1,032,536 crore as of September 30, 2021.

Canara Bank was established in Mangalore in 1906. Treasury Operations, Retail Banking Operations, Wholesale Banking Operations, and Other Banking Operations comprise the company’s segments. It has been in the sector for over a century and is a leader in the Indian banking community.

AU Small Finance

AU SFB (previously Au Financiers (India) Ltd) was founded in 1996 as a non-bank financial company (NBFC) by Mr. Sanjay Agarwal and has a 25+ year history as a retail-focused firm. AU began banking activities in April 2017 and began trading on the Bombay and National Stock Exchanges in July 2017. AU has a strong market position in Rajasthan and has recently expanded operations to Maharashtra, Gujarat, and other states.

AU SFB’s primary concentration is in the retail asset-finance segment, specifically on automobile financing (about 38% of AUM), as well as on small business loans to MSMEs (38 percent). Additionally, housing, gold loans, personal loans, overdrafts, and commercial banking products are segmented.

The liability product portfolio of AU SFB encompasses the whole range of current accounts, savings accounts, recurring and term deposits, transaction banking, a diverse range of third-party mutual funds, and insurance coverage.

As of September 30, 2021, AU SFB operated through 811 banking touchpoints, serving 21.3 million consumers throughout 15 states and two union territories with a workforce of 23,435 personnel.

AU Small Finance Bank is a financial institution that offers a variety of banking and financial services, including retail banking, wholesale banking, and treasury operations, among others.

Yes Bank

YBL is a privately held bank founded in 2004. It is the sixth-largest private bank in terms of total assets among the 18 largest private banks in India.

In India, there are several significant universal private sector banks, having a combined market share of 1.6 percent in advances as of June 30, 2021. As of June 30, 2021,

The bank operated a network of 1,139 branches throughout Gujarat, as well as an overseas branch in Gift City, India. As of June 30, 2020, YBL’s regulatory capital adequacy ratio (Basel III) was 8.60 percent (CET-I of 6.50 percent and Tier I of 6.60 percent).

On March 5, 2020, the Central Government imposed a ban on YBL, restricting payments to its depositors and creditors. The prohibition was lifted on March 18, 2020, and the government approved a plan for the bank’s rebuilding, under which it would receive Rs. 10,000 crore in equity from SBI and other domestic financial institutions.

Apart from the equity injection, YBL’s board of directors has been restructured with the appointment of a new MD and CEO from SBI. In July 2020, the bank completed an Rs. 15,000 crore follow-on public offer (FPO). As a result, SBI’s ownership decreased to 30% from 48% (following the reconstruction scheme). Yes, Bank Limited is a privately-held financial institution. The bank provides banking services to businesses and institutions, including corporate and institutional banking, financial markets, investment banking, corporate finance, branch banking, business and transaction banking, and wealth management.

Federal Bank

The Federal Bank Limited (‘the Bank’) began as Travancore Federal Bank Limited in 1931. It offers retail and corporate banking, as well as para banking services such as debit cards and third-party product distribution, as well as treasury and foreign exchange.

Federal Bank is a private sector bank with a market capitalization of Rs 1,38,583 crore and deposits of Rs 1,71,925 crore as of September 30, 2021. Its headquarters are located in Aluva, Kerala. It has a sizable number of non-resident Indian customers in the Middle East. As of September 30, 2021, the bank had 1,272 branches and 1,874 automated teller machines (also known as cash recyclers).

The bank is concentrating its efforts on growing its retail book and boosting the granularity of its wholesale book. As of September 30, 2021, the wholesale (including corporate and commercial banking) and retail divisions (covering retail, agriculture, and business banking) were split 46:54, down from 51:49 on March 31, 2020.

Profit after tax (PAT) was Rs 1,664 crore in fiscal 2021, while total revenue (net of interest expenses) was Rs 7,745 crore, up from Rs 1,580 crore and Rs 6,794 crore in the previous fiscal.

The PAT was Rs 842 crore and the total income (net of interest expenses) was Rs 4,103 crore for the half-year ended September 30, 2021, compared to Rs 725 crore and Rs 3,774 crore in the preceding fiscal.

Final Thoughts:

Banks are like veins in the Human body. Without proper blood flow, the body dies and similarly, without a proper banking channel, the economy dies.

India has a well-managed Banking channel. NPA and corrupt loan default cases from time to time emerge and bureaucratic actions will be taken. But, what matters the most is how the economy grows even with such disturbances.

As of September 24, 2021, the RBI estimated that bank credit stood at Rs. 109.56 trillion (the US $1.48 trillion). As of September 24, 2021, credit to non-food industries totaled Rs. 155.95 trillion (US $2.11 trillion).

In FY20, public sector banks’ assets totaled Rs. 107.83 lakh crore (the US $1.52 trillion).

Total banking sector assets (public, private, and foreign banks combined) grew to the US $2.52 trillion in FY20.

In addition to cooperative credit institutions, the Indian banking system comprises 12 public sector banks, 22 private sector banks, 44 foreign banks, 43 regional rural banks, 1,484 urban cooperative banks, and 96,000 rural cooperative banks. As of August 2021, India had a total of 213,570 ATMs.

Increased infrastructure spending, rapid implementation of projects, and the continuation of reforms are projected to provide additional impetus to the banking sector’s growth. All of these characteristics indicate that India’s banking sector is well-positioned for vigorous expansion, as quickly rising firms will need loans from banks.

Additionally, technological advancements have elevated mobile and online banking services to prominence. The banking sector is placing greater emphasis on improving customer service and modernizing its digital infrastructure in order to improve the overall customer experience and provide banks with a competitive edge.

India’s digital lending market was worth US $75 billion in the fiscal year 2018 and is expected to reach $1 trillion by the fiscal year 2023, owing to a fivefold increase in digital disbursements. India’s fintech industry is estimated to reach Rs. 6.2 trillion (US $83.48 billion) by 2025.

Disclaimer: All the information on this website is published in good faith and for general information purposes only.

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