You are welcome to try out the new site at https://beta.valueresearchonline.com
Books are a bank's best friend
Here is how the loan-book growth of listed Indian banks has changed over time
By Ashish Jain | Mar 1, 2017
A bank's loan book signals its financial might. This is so because it is loan-book assets that generate interest for banks, and interest income is the bread and butter for banks. A high loan-book growth indicates fast-growing interest income.
The tables show the loan-book growth of listed Indian banks in the public and the private sectors over 20 years. The 20-year time period has been divided into blocks of five years. The top-performing banks in a block of five years are highlighted in green; the worst-performing ones, in red. As can be observed, different banks have emerged at the top in different periods.
On comparing public-sector banks and private-sector banks, it is clear that the latter have outperformed the former in terms of loan-book growth. On the one hand, while public-sector banks have grown their loan books just 30.47 times in 20 years, private-sector ones have grown their loan books 413.96 times.
If you thought that the outperformance by private-sector banks is primarily due to a couple of banks that have performed exceptionally well - HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank - wait! Even if you removed these banks from the sector, the loan books of the rest of the private-sector banks would have still grown 132.22 times, far ahead from the public-sector peers.
And how have the top public-sector and private-sector lenders performed in comparison to each other? In the last 20 years, the current largest private-sector bank HDFC Bank has increased its loan book from Rs 368 crore in 1996 to a mammoth Rs 4,87,290 crore in 2016 (1,321 times). The largest public-sector lender SBI has increased its loan book by only 31 times during the same period. Public-sector banks, it looks like, have much ground to cover.
Are you missing an opportunity to invest in great stocks at low valuations? There are thousands of listed companies in India and yet only a handful that are worth investing at a particular time and at a particular price.
Our equity team has sifted through hundreds of companies and selected stocks that you should invest in. This list now has 37 stocks on it, and new ones are being added every month. Thousands of our members are using stagnant equity markets to buy great stocks at low prices. Membership of Value Research Stock Advisor is available at a 40% to 60% discount.