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Topic: ICICI Bank vs. HDFC Bank.

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basant
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Posted: 11/Oct/2006 at 4:14pm

Originally posted by basant

Increasing number of branches and ballooning customers would help the company in cross selling products. This fee base income should keep the bank in good stead.

I had the experience of how scalable this cross selling business could become.DSP merrill Lynch is coming out with a small cap fund and HDFC Bank is wooing its cutomers day in and day out to subscribe to this "at par Rs 10 NFO".

1) I received a mail from them in my email ID

2) WHen i went to the Bank there was a person waiting to make me an investor into this "Rs 10 at par NFO".

3) ANd I just received an SMS on my mobile about this fund. I had applied for the insta alert banking transaction facility but now they are advertising about how we could apply for this fund.

Great stock. Great concept but the price has run up hard

Edited by basant - 11/Oct/2006 at 4:16pm

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basant
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Posted: 12/Oct/2006 at 7:09pm

HDFC bank is raising a US $ 100 million debt. this should add to the EPS for the year since the company's RoE is significantly higher then the cost of debt.

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

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s_praharaj
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Posted: 13/Oct/2006 at 8:16pm

I have some interesting figure on ICICI Bank and HDFC Bank, which may help in deciding which is better.

ICICI Bank HDFC Bank

Branches 614 535

Employees 25984 14878

Advances 1461131m 350613

Deposits 1650832 557968

Business 3112463 908581

Low Cost Deposit 375105 309383

Business per Branch 5069.20 1698.30

Business per Employee 119.80 61.1

NP per Branch 41.4 16.3

NP per Employee 1.0 0.6

(Amount in millions rupees) source-SSKI

Though the above figures and statistics are clearly in favour of ICICI Bank,

my personal feeling is that HDFC Bank is a better Bank than ICICI Bank, due to following reasons.

1. ICICI is very aggressive and takes a lot of risk.

2. I am not really sure about the official NPA Level of the Bank.

3. I somehow feel that ICICI Bank is a high risk high gain stock where as HDFC Bank is a blue chip. They may be conservative, but they do Banking as it should be done.

Edited by s_praharaj - 13/Oct/2006 at 8:17pm

Shashi Praharaj

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basant
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Posted: 13/Oct/2006 at 8:24pm

I think that you are a Banker and a Banker is the best judge on the business of another banker.

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

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s_praharaj
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Posted: 13/Oct/2006 at 10:29pm

Basant,

You are really great, How could you get it,

I have never given a hint.

I work as a Chief Manager in a public Sector Bank in Mumbai,

Soon I will introduce myself in detail in the appropriate column.

It might be a personal preference, but I prefer HDFC Bank.

Though ICICI Bank is a high risk game, still they have the size which can not be ignored. They have brought the Bank to such a colossal size, that if tomorrow anything adverse happens, the Govt will be the first to bail them out. They have this advantage.

Thanx again for such an accurate guess.

Shashi Praharaj

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basant
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Posted: 13/Oct/2006 at 10:52pm

No, I am not great at this. I read it somewhere if I can recollect well not sure where but yes, people in the same industry have better insight then the ones from the outside.

ICICI Bank's RoE is less then its growth rate so it would have to approach the markets for equity dilutiuon and that will affect the stock's performance. Equity dilution will affect EPS etc etc.

I do not remember HDFC Bank having done any equity offering after its IPO and has been a 30 bagger in 11 years (with dividends).

Kamath and the ladies are doing a great job at ICICI and while the Bank may become a global bank we as shareholders would be more concerned with our stock prices.No doubt it is a good bank but just that HDFC is better.

Regards,

Basant

Edited by basant - 13/Oct/2006 at 10:55pm

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

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basant
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Posted: 17/Oct/2006 at 9:34pm

Another stunner from HDFC Bank. Inspite of higher provisioning 69%; the company came out with a higher net profit at 31% y-o-y. The notable items was the swelling fee income which grew at close to 44% (should grow faster due to the cross selling startegy of the Bank indicated above). ALso the net interest margin at 4% compares favourably with ICICI Bank and SBI at 2,8% each.

The strategy of the Bank to reduce interest rates as part of the festive offer indicates that the interest rate fears are close to over.This is a jewel in the crown.

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

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monu_duggad
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Joined: 07/Sep/2006
Location: India
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Posted: 09/Dec/2006 at 4:43pm

Icici announced merger of sangli bank with itself.

Its expected to issue additional 3.4 million shares...

Forum

Wont it lead to drop in price because of equity dilution of additional 3.4 million shares ? ( I have icici bank shares)

Also...with the hike in crr by 50 points.....how do u think its gonna impact the banking sector....will it end the party of banking stocks which r having nice run after june crash ? Or 50 basis points dont matter much....

Somehow i feel markets might overreact keeping friday's sell-off in mind..

Edited by monu_duggad - 09/Dec/2006 at 4:44pm

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