HDFC Bank vs ICICI Bank: Which is the Better Bet for 2025?

HDFC Bank and ICICI Bank have delivered steady returns despite the banking sector's pressure. Their Q1 results exceeded estimates, and they are top picks for brokerage houses. HDFC Bank's share price is down 5% in a month but up 17% in a year, while ICICI Bank's share price is down 6% in a month but up 13.5% in a year. Both banks have maintained strong asset quality with net NPA ratios at 0.4% and 0.41% respectively, and their margins have contracted by 10 bps and 2 bps respectively.

HDFC Bank and ICICI Bank have shown resilience despite the recent pressures faced by the banking sector. Both banks have delivered steady returns, with their Q1 results exceeding estimates and earning top picks from brokerage houses. HDFC Bank's share price has seen a decline of 5% in the last month but has appreciated by 17% over the past year, while ICICI Bank's share price has dropped by 6% in the last month but has increased by 13.5% in the same period.

Asset quality remains strong for both banks, with net non-performing asset (NPA) ratios at 0.4% and 0.41% respectively. HDFC Bank's NPA ratio has been maintained through robust underwriting and a risk-calibrated lending approach, while ICICI Bank has shown stable asset quality with a contingency provisioning buffer of Rs 13,100 crore. The banks have also been able to manage margin compression due to recent rate cuts. HDFC Bank's net interest margin (NIM) contracted by 10 bps to 9.5%, while ICICI Bank saw a 7 bps decline to 4.34%.

Key brokerage houses see significant upside for both stocks. Jefferies and Motilal Oswal have both assigned a "Buy" rating to HDFC Bank, with target prices of Rs 2,400 and Rs 2,300 respectively. For ICICI Bank, Jefferies and Motilal Oswal have also given a "Buy" rating with target prices of Rs 1,760 and Rs 1,670 respectively.

Institutional investors have also shown confidence in HDFC Bank, with Price T Rowe Associates Inc. MD increasing its holdings by 2.7% to over 1 million shares valued at approximately $69 million. Other major institutional investors such as GQG Partners LLC, JPMorgan Chase & Co., Temasek Holdings Private Ltd, Royal Bank of Canada, and Bank of America Corp DE have also increased their stakes in HDFC Bank.

HDFC Bank's latest quarterly earnings report showed earnings per share (EPS) of $0.74, missing analysts' consensus estimates by $0.01. The company's revenue for the quarter was $5.10 billion, with a net margin of 14.49% and a return on equity of 11.60%. The bank also announced a special dividend of $0.1707 per share, representing a yield of 101.0%.

In conclusion, HDFC Bank and ICICI Bank have demonstrated strong performance despite the sector's challenges. Their steady returns, robust asset quality, and positive brokerage ratings make them attractive investment options for investors and financial professionals.

References:
[1] https://www.financialexpress.com/market/hdfc-bank-vs-icici-bank-which-bank-is-a-better-bet-for-2025-check-price-target-analyst-views-3962954/
[2] https://www.marketbeat.com/instant-alerts/filing-price-t-rowe-associates-inc-md-boosts-stock-position-in-hdfc-bank-limited-hdb-2025-08-26/