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

  1. HDFC Bank
  2. ICIC Bank
  3. State Bank of India (SBI)
  4. Kotak Mahindra Bank
  5. Axis Bank

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

HDFC Bank share price is currently on the rise.

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

ICICI Bank share price is relatively affordable.

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.

SBI share price shows great historical long-term returns.

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

Kotak Mahindra Bank share price is to watch out for.

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%

Axis Bank share price is stable.

Parting Thoughts

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.

Happy Investing 💰

PS: The above-mentioned stocks are just for educational purposes and should not be construed as recommendation for buying/selling. Investments in securities are subject to market risk read all the related documents carefully before investing. The stocks discussed on this website may not be suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and, if in any doubt, should seek advice from an investment adviser.

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