HDFC Bank Limited (ADR) (HDB) is a Screaming Buy!

Tracking the Financials

HDFC Bank reported staggering results, with its quarterly net income surging by 30% YoY. According to Business Standard, “It was the 53rd consecutive quarter of 30% or more year-on-year growth in the bank’s quarterly net profit.” Its net interest income grew by 22%, while its Non-Performing-Assets (NPAs) stood at just 1%. Owing to a high interest rate environment, its total deposits grew by 22%, while its Current and Savings Account (CASA) stood at an impressive 45.4%, clearly taking the Street by surprise.

Foolish Conclusion

Although ICICI Bank reported lower NPAs, its high leverage makes it a risky investment. Moreover, its shares have lost around 25% over the last 5 years, which is not impressive by any means.

HDFC Bank, however, has a track record of stellar performance, with little or no exposure to debt-ridden economies. Moreover, the Volcker rule, which restricts proprietary trading (in case there’s a conflict of interest) will hit Goldman Sachs and Morgan Stanley the hardest. Wells Fargo & Company (NYSE:WFC) and US Bancorp are solid conservative banks, but the US economy is not expected to grow at a rapid pace. This limits their potential upside. As clear as it can get, I give HDFC Bank a Foolish Outperform Rating, but not ICICI.

The article This Bank is a Screaming Buy! originally appeared on Fool.com and is written by Piyush Arora.

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