Comparing ICICI Bank (NYSE:IBN) and HDFC Bank (NYSE:HDB)

HDFC Bank (NYSE:HDB) and ICICI Bank (NYSE:IBN) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Institutional and Insider Ownership

17.6% of HDFC Bank shares are owned by institutional investors. Comparatively, 18.2% of ICICI Bank shares are owned by institutional investors. 1.0% of HDFC Bank shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares HDFC Bank and ICICI Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HDFC Bank	$54.16 billion	2.15	$7.51 billion	$1.75	13.00
ICICI Bank	$2,317.08 billion	0.05	$6.13 billion	$1.68	17.90

HDFC Bank has higher earnings, but lower revenue than ICICI Bank. HDFC Bank is trading at a lower price-to-earnings ratio than ICICI Bank, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

HDFC Bank has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, ICICI Bank has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.

Dividends

HDFC Bank pays an annual dividend of $0.34 per share and has a dividend yield of 1.5%. ICICI Bank pays an annual dividend of $0.21 per share and has a dividend yield of 0.7%. HDFC Bank pays out 19.4% of its earnings in the form of a dividend. ICICI Bank pays out 12.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares HDFC Bank and ICICI Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HDFC Bank	15.84%	11.70%	1.68%
ICICI Bank	25.84%	14.48%	1.88%

Analyst Ratings

This is a breakdown of current recommendations for HDFC Bank and ICICI Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HDFC Bank	1	2	1	0	2.00
ICICI Bank	0	1	1	2	3.25

HDFC Bank presently has a consensus price target of $26.10, suggesting a potential upside of 14.75%. Given HDFC Bank’s higher possible upside, research analysts plainly believe HDFC Bank is more favorable than ICICI Bank.

Summary

ICICI Bank beats HDFC Bank on 9 of the 16 factors compared between the two stocks.

About HDFC Bank

HDFC Bank Limited provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in three segments: Wholesale Banking, Retail Banking, and Treasury Services. It accepts savings, salary, current, rural, public provident fund, pension, and demat accounts; fixed and recurring deposits; and safe deposit lockers, as well as offshore accounts and deposits, and overdrafts against fixed deposits. The company also provides personal, home, car, two-wheeler, business, doctor, educational, gold, consumer, and rural loans; loans against properties, securities, fixed deposits, rental receivables, and assets; loans for professionals; government sponsored programs; and loans on credit card, as well as working capital and commercial/construction equipment finance, healthcare/medical equipment and commercial vehicle finance, dealer finance, and term loans. In addition, it offers credit, debit, prepaid, and forex cards; payment and collection, export, import, remittance, bank guarantee, letter of credit, trade, hedging, and merchant and cash management services; insurance and investment products. Further, the company provides short term finance, bill discounting, structured finance, export credit, loan repayment, and documents collection services; online and wholesale, mobile, and phone banking services; unified payment interface, immediate payment, national electronic funds transfer, and real time gross settlement services; and channel financing, vendor financing, reimbursement account, money market, derivatives, employee trusts, cash surplus corporates, tax payment, and bankers to rights/public issue services, as well as financial solutions for supply chain partners and agricultural customers. It operates branches and automated teller machines in various cities/towns. The company was incorporated in 1994 and is headquartered in Mumbai, India.

About ICICI Bank

ICICI Bank Limited provides various banking products and services in India and internationally. It operates through Retail Banking, Wholesale Banking, Treasury, Other Banking, Life Insurance, and Others segments. The company offers savings, salary, pension, current, and other accounts; and time, fixed, recurring, and security deposits services. It also provides home, car, two-wheeler, personal, gold, and commercial business loans, as well as loans against securities and other loans; business loans, including working capital finance, term loans, collateral free loans, loans without financials, finance for importers and exporters, and overdraft facilities, as well as loans for new entities and card swipes; and credit, debit, prepaid, travel, forex, and corporate cards. In addition, the company offers pockets wallet; fixed income products; investment products, such as mutual funds, gold monetization schemes, initial public offerings, and other online investment services; and agri and rural business, farmer finance, tractor loans, and micro banking services, as well as other services to agri corporates. Further, it provides portfolio management, trade, foreign exchange, locker, private and NRI banking, and cash management services; family wealth and demat accounts; commercial and investment banking, capital market, custodial, and institutional banking services; health, personal accident, fire, and motor insurance, as well as distributes general and life insurance products; and Internet, mobile, and phone banking services. Additionally, the company offers securities investment, broking, trading, and underwriting services; and merchant banking, trusteeship, housing finance, pension fund management, asset management, investment advisory, points of presence, and private equity/venture capital fund management services. ICICI Bank Limited was founded in 1955 and is headquartered in Mumbai, India.