Banks are the backbone of any economy. Banking stocks also go through their share of ups and downs, most of the time depending on the economy. A stable economy boosts lending and borrowing, resulting in the growth of the banking sector. A poor economy results in defaults and bad debts, which negatively impact the banks’ performance.
🏦 Top 5 banking stocks in India that you can consider for long term investing
1️⃣ HDFC Bank
Establishing itself as one of the industry leaders in retail banking, HDFC bank focussed on individuals, catering to private banking and wealth management. Their growth over the years is unparalleled while maintaining the lowest NPA of around 0.30% to 0.40% in the industry.
- 19% CAGR in 5 years
- 17% unsecured loans, and yet they have the lowest NPA
- More than 5,500 branches
- Shifting focus to strike a balance between wholesale and retail banking to counter the impact of Covid-19
2️⃣ ICICI Bank
ICICI Bank has made India’s second-largest private sector bank based on asset size. It also bagged the title of India’s Domestic Systemically Important Bank (D-SIB).
- Their investment in technology makes them a key player
- Efficient mobilisation of low-cost deposits earns them a healthy CASA of around 44%
- A decent NPA of 0.99% and a Tier I Capital Adequacy Ratio of 17.33% determines how well the bank’s capital covers its credit risk
- Massive Balance Sheet size at Rs.12 lakh crore
3️⃣ State Bank of India
Everyone’s favourite public sector bank hit an all-time high in September 2021. The primary cause for this was the government’s announcement of the resolution of bad loans. The guarantee amounting to security receipts of Rs.30,600 crores issued by the National Asset Reconstruction Company (NARCL) is the reason why SBI cut. Experts predict that this move will have a long-term impact on the stock price, making it a lucrative investment.
4️⃣ Kotak Mahindra Bank
Kotak Mahindra Bank is the leading bank offering a wide range of financial services. Leading the industry with a CASA ratio of around 60%, they adopt a cautious stance regarding unstructured retail and lending.
- 1622 branches and 2601 ATMs across India
- CAGR id 25.75% in the last years
- Proven stable leadership, best-in-class margins
- A recent focus on higher customer acquisition
5️⃣ Axis Bank
The third-largest bank in the private sector, Axis Bank boasts strong capital coverage.
- A strong CASA of 42%
- Rapid growing total deposits
- CAR of around 20%
The banking sector was hit because of the pandemic-induced lockdowns, but they are now rapidly recovering. Before picking the right banking stocks to invest in, several factors must be considered and your investment strategy must be in place. The combination of these factors determines the profitability of the banks. Maintaining a low net NPA (non-performing assets), a strong CASA (current assets and savings account) ratio and other such factors make a lucrative banking stock. With online investing platform having become highly convenient for everyone, it is possible to be a part stakeholder of the Banking Industry.
📌 You can also read:
- Top 10 Highest Dividend Paying Stocks in India
- Top 5 Electric Vehicle Stocks in India
- Top 5 Pharma Stocks in India in 2022 – Best Pharma Stocks
- What are the Best Stocks to Invest Under Rs. 20
Happy Investing 💰
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.