Sensex has tanked 1000+ points in the worst fall ever. With Diwali just 2 days away no one is really celebrating and the Diwali mood did not set in yet. May be a few crackers would do for us. But there is one person who is happy. Not about the fall but what happened after the fall. Aditya Puri, CMD of HDFC Bank. HDFC bank has beaten ICICI bank in market capitalization to gain the second spot. State bank of India still has the first spot.
Market capitalization is calculated by multiplying the outstanding shares with the current market price of the share. Based on this calculation HDFC bank’s market capitalization stands at 45563 crores and ICICI bank’s market-cap stands at 40698 crores. The fact that ICICI bank is on a free fall and HDFC bank has a reasonable fall has helped this. Though this difference might be wiped out in a week it is something to cheer about for HDFC bank and a lot to think for ICICI Bank.
ICICI bank has been very aggressive with their loans, overseas expansion and portfolio of products. HDFC bank has opened its first overseas branch couple of days ago in Bahrain. HDFC has been cautious about lending the whole time.
I have personal loans with ICICI, Kotak Mahindra and HSBC bank. I also have a car loan with ICICI bank. I recently applied for another personal loan but was rejected. Can you guess which bank it is? It’s HDFC bank. That is how they run their business. With a little caution and a little aggression. I am actually not happy about the rejection but now I know their business strategy. Looking at my loan laundry list you might be wondering about the kind of life I am living. That would be a topic for another post.
Other thing, which strikes me the most, is the brand recall. HDFC does not have the brand recall that ICICI enjoys. That is the reason why it wasn’t subjected to so many rumors. Any news about ICICI has to be taken with a pinch of salt. I am really not sure which one is a rumor and which one is not. Yesterday when the RBI has reduced the repo rate to 8% there was news from ICICI bank that they are increasing the home loan rates for new borrowers. That did not make any sense to me. Why would a bank do that especially when every one knows that the interest rates were just reduced? Then came a statement from the bank that the rates were hiked before the cut was announced. Now, who would take a home loan from ICICI when it will be available for a cheaper rate in theÂ next bank? I did not even mention the number of rumors that went around ICICI bank.
Have you heard anything about HDFC bank lately? I haven’t. That is the reason why it’s the best bank and second in market capitalization.
This is the tale of two banks. Aggression is good but controlled aggression is even better. ICICI bank might regain its spot but HDFC bank will remain as the top bank.