The banking sector stocks have been in focus. Especially the largest private sector lender, HDFC Bank has been in the spotlight after the sudden exit of the Chairman last week. The bank has approved the appointment of external law firms (domestic and international) to review Chakraborty’s resignation letter.
Given the sharp price action across the banking sector stocks, Financialexpress.com has compared the dynamics driving two of the country’s largest lenders – HDFC Bank and State Bank of India.
Here is a quick analysis of how the public sector lender stacks up Vs the private sector banking major.
HDFC vs SBI Bank: Share price performance
The divergence in stock performance between State Bank of India and HDFC Bank over the same period is sharp and tracks the difference seen in their financial momentum. SBI shares have risen 31.93% over the past year and 188.38% over five years, despite a recent one-month decline of 16.10%.
In contrast, HDFC Bank shares have fallen 17.52% over one year and remained largely flat over five years with a decline of 0.45%, with sharper pressure in recent periods including a 25.11% fall year-to-date and 22.45% over six months.
HDFC vs SBI Bank: Profit growth and cost behaviour
State Bank of India reported its highest-ever quarterly net profit at Rs 21,028 crore, up 24.49% year-on-year, while HDFC Bank reported net profit of Rs 18,653 crore, up 11.5%.
SBI’s total business stood at Rs 103 lakh crore, with deposits at Rs 57.01 lakh crore and advances at Rs 46.83 lakh crore. HDFC Bank’s balance sheet stood at Rs 40.89 lakh crore, with deposits at Rs 28.60 lakh crore and advances at Rs 28.44 lakh crore.
SBI’s profit growth came with a sharp increase in operating profit and contained credit costs. Operating profit rose to Rs 32,862 crore from Rs 23,551 crore, while net interest income increased to Rs 45,190 crore from Rs 41,446 crore. Credit cost stood at 0.29%.
HDFC Bank reported net revenue of Rs 4,58,700 crore compared with Rs 4,21,100 crore a year ago, with net interest income at Rs 3,26,200 crore versus Rs 3,06,500 crore. Profit after tax rose to Rs 18,653 crore from Rs 16,735 crore, while provisions stood at Rs 2,840 crore.
SBI’s earnings growth was faster, with profit rising 24.49% compared with HDFC Bank’s 11.5%, while operating profit growth at SBI was 39.54% against more moderate expansion at HDFC Bank.
During the analyst meet, Chairman C S Setty said, “The net profit is up by 24.49% year-on-year, driven by higher operating profitability and lower credit costs at 0.29%.”
He also said, “The operating profit is Rs. 32,862 crores, up 39.54% year-on-year.”
The difference lies in cost behaviour, where SBI saw lower provisioning impact while HDFC Bank maintained steady expense levels.
HDFC vs SBI Bank: Loan growth and segment expansion
SBI’s advances grew 15.14% to Rs 46.83 lakh crore from Rs 40.67 lakh crore. SME advances rose to Rs 6.00 lakh crore from Rs 4.96 lakh crore, agriculture to Rs 3.92 lakh crore from Rs 3.36 lakh crore, and corporate to Rs 13.33 lakh crore from Rs 11.76 lakh crore.
HDFC Bank’s gross advances increased to Rs 28.44 lakh crore from Rs 25.19 lakh crore. Retail loans stood at Rs 15.75 lakh crore, business banking at Rs 4.35 lakh crore, and corporate and wholesale loans at Rs 7.71 lakh crore.
The growth rate gap is visible, with SBI expanding faster in SME and agriculture, while HDFC Bank’s growth remained aligned across segments without sharp increases.
Setty said, “The credit growth was up 15.14% year-on-year as of December ‘25,” during the conference call.
He added, “All the components of RAM – Retail, Agriculture and SME, have witnessed robust growth.”
HDFC Bank’s approach remains measured, while SBI is expanding across segments at a faster pace.
HDFC vs SBI Bank: Deposits, CASA and funding balance
SBI’s deposits rose 9.02% to Rs 57.01 lakh crore from Rs 52.29 lakh crore. CASA deposits grew 8.88%, with CASA ratio at 39.13%, while retail term deposits increased 14.54%.
HDFC Bank’s deposits increased 11.6% to Rs 28.60 lakh crore from Rs 25.64 lakh crore. CASA deposits stood at Rs 8.98 lakh crore, while time deposits were at Rs 18.99 lakh crore.
SBI’s loan growth of 15.14% outpaced deposit growth of 9.02%, while HDFC Bank’s deposit growth at 11.6% remained closer to its loan growth of around 11.9%.
Setty added, “The domestic credit deposit ratio was at 72.98% at the end of Q3.”
He also said, “Total deposit growth has remained healthy with 9.02% year-on-year.”
The funding gap at SBI is wider, while HDFC Bank maintains closer alignment between deposits and advances.
HDFC vs SBI Bank: Margins and operating efficiency
HDFC Bank reported net interest margin of 3.35%, while SBI reported overall margin of 2.99% and domestic margin of 3.12%.
SBI’s interest income rose to Rs 1,22,556 crore, with interest expenses at Rs 77,366 crore. HDFC Bank reported operating expenses of Rs 1,87,700 crore with a cost-to-income ratio of 39.2%.
Margins remain higher at HDFC Bank, while SBI’s margin shows slight compression during the quarter.
Setty said, “Digital channels are now firmly embedded in our customers’ behaviour.”
During the call he further added, “The focus is on lowering cost to serve.”
SBI is improving cost efficiency through digital usage, while HDFC Bank maintains margin strength through pricing discipline.
HDFC vs SBI Bank: Asset quality and provisioning strength
SBI’s gross NPA improved to 1.57% from 2.07%, while net NPA declined to 0.39% from 0.53%. Provision coverage ratio stood at 75.54%, and 92.37% including AUCA.
HDFC Bank reported gross NPA at 1.24% compared with 1.42%, while net NPA stood at 0.42%. Provisions for the quarter were Rs 2,840 crore.
SBI also reported additional non-NPA provisions of Rs 30,642 crore, which is about 170% of its net NPAs.
Setty explained, “The asset quality continues to be industry-leading, with gross NPAs at 1.57%.”
He added, “The NPAs continue to be at its lowest level in over two decades.”
HDFC Bank continues to maintain lower NPAs, while SBI shows improvement across both ratios and provisioning buffers.
HDFC vs SBI Bank: Capital and return ratios
SBI’s capital adequacy ratio stood at 14.04% compared with 13.03% a year ago. Return on equity was 20.68%, while return on assets stood at 1.16%.
HDFC Bank reported capital adequacy of around 19.9%, with Tier 1 capital at 17.4%. Return on assets stood at 1.9%, while return on equity was about 13.9%.
SBI’s return on equity is higher, while HDFC Bank’s return on assets and capital buffer are stronger.
CEO Sashidhar Jagdishan said, “We continue to maintain rate discipline, and that has been extremely key.”
He added, “Core individual retail customer segments were seen to be quite strong.”
The difference lies in capital usage and efficiency across assets.
HDFC vs SBI Bank: Strategy and projections
SBI’s management indicated continued focus on scale and digital growth.
Setty said, “Scaling YONO from 10 crore registered users to 20 crores over the next 2 to 3 years is expected to support operating leverage and ROA sustainability.”
He also said, “Our strategy is anchored around a long-term horizon with continuous investments in people, processes, products and technology.”
HDFC Bank’s management commentary focused on balance and discipline.
Jagdishan said, “We set our sights on a very balanced credit across customer segments.”
He added, “We are confident that continued focus on our strengths will bring the expected outcomes.”
SBI is pursuing scale expansion, while HDFC Bank continues with calibrated growth.
HDFC vs SBI Bank: Valuation and near-term comparison
SBI currently shows higher profit growth at 24.49% and return on equity at 20.68%, compared with HDFC Bank’s 11.5% profit growth and 13.9% return on equity.
HDFC Bank maintains higher margins at 3.35% compared with SBI’s 2.99%, and stronger capital at 19.9% versus 14.04%.
The comparison shows SBI with stronger earnings acceleration, while HDFC Bank continues with stable margin and funding profile.
HDFC vs SBI Bank: What brokerages say and where they see value
Brokerage views on both banks bring out a clear difference in positioning, with both firms maintaining positive ratings but backing them with different triggers and valuation comfort.
For HDFC Bank, Motilal Oswal has a ‘Buy’ rating with a target price of Rs 1,100, implying an upside of about 48.2% from current levels. The brokerage said, “the assurance from the management team, Mr. Mistry’s appointment as an interim chairman, and the RBI’s endorsement of the bank’s corporate governance and compliance standards have helped assuage some of the concerns.”
It added that operating performance in the coming year will be key to stock movement, while maintaining estimates and expecting RoA/RoE at 1.9%/14.5% by FY27E.
Nuvama Research also maintains a ‘Buy’ on HDFC Bank with a higher target price of Rs 1,170, indicating about 57.6% upside from the current price.
The brokerage noted that core Pre-Provision Operating Profit (PPOP) grew 8% YoY, while NIM expanded to 3.35%, and expects loan growth to pick up with management guiding to outperform system growth in FY27.
On SBI, Motilal Oswal has a ‘Buy’ rating with a target price of Rs 1,300, implying about 26.2% upside from current levels.
Nuvama Research has also retained a ‘Buy’ on SBI with a target price of Rs 1,250, implying about 21.3% upside from the current price.
The brokerage pointed to core PPOP growth of 31% YoY, loan growth guidance raised to 13–15%, and stable margins with NIM around 3%, while noting that SBI’s earnings have outpaced private banks for three consecutive quarters.
The contrast in brokerage stance comes down to near-term drivers. For HDFC Bank, both firms are focusing on deposit growth, margin stability and post-merger normalisation, while for SBI the emphasis is on earnings strength, faster credit growth and improving asset quality.
Conclusion
The December quarter shows SBI and HDFC Bank operating with different internal drivers. SBI reported faster growth in profits and advances, supported by lower credit costs and expanding segments. HDFC Bank maintained higher margins, stronger capital and balanced funding growth.
Both banks reported low NPAs and stable balance sheets. SBI’s numbers show faster growth in the current period, while HDFC Bank’s numbers show steady performance.
The comparison shows two distinct operating approaches within the same banking system, shaped by scale, funding and growth strategy.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.