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SBI, HDFC Bank, ICICI Bank: India's top 3 lenders give tough competition to global banks in Q2. Here's how

SBI, HDFC Bank, ICICI Bank: India's top 3 lenders give tough competition to global banks in Q2. Here's how

Data showed that HDFC Bank’s market value gained 17%, ending Q2 2024 with an MCap of $154.4 billion. This helped the private sector lender jump three spots to the 10th position, according to the data and analytics firm GlobalData.

Rahul Oberoi
Rahul Oberoi
  • Updated Jul 12, 2024 2:53 PM IST
SBI, HDFC Bank, ICICI Bank: India's top 3 lenders give tough competition to global banks in Q2. Here's howChina Construction Bank and HDFC Bank stocks recorded over 15% growth, while TD Bank saw a decline of nearly 10% in market value.

The country’s top three lenders, including State Bank of India, HDFC Bank, and ICICI Bank, witnessed a rise in their market capitalisation in the second quarter of 2024, improving their ranking in the global banking landscape.

Data showed that HDFC Bank’s market value gained 17%, ending Q2 2024 with an MCap of $154.4 billion. This helped the private sector lender jump three spots to the 10th position, according to the data and analytics firm GlobalData.

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The research firm stated that strong quarterly results, meeting investor expectations and rising optimism about the bank’s future performance, were the catalysts. HDFC Bank is expected to reclaim its industry-leading profitability, benefiting from an improved loan mix and normalized funding costs. The bank is slated to announce its June quarter results on July 20.

Data highlighted that the Royal Bank of Canada was in the 10th spot at the end of Q1 2024.

Similarly, the market value of ICICI Bank increased by 11.5% to $102.7 billion in Q2 2024, helping the lender climb two spots to the 18th rank among the top 25 global banks. The lender will report its June quarter results on July 27, 2024. TD Bank was in the 18th rank in the preceding quarter.

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The market cap of the State Bank of India (SBI) increased by 11.9% to $90.1 billion during the same quarter. As a result, the country’s largest lender by assets moved up two spots to 21st place in the list of top 25 global banks. Al Rajhi Banking & Investment was in the 21st spot in Q1 2024.

Overall, the aggregate market capitalisation of the top 25 global banks increased by 5.4% to $4.11 trillion quarter-on-quarter (QoQ) during the second quarter (Q2) ended June 30, 2024, driven by favourable global economic signals.

China Construction Bank and HDFC Bank stocks recorded over 15% growth, while TD Bank saw a decline of nearly 10% in market value. JPMorgan Chase retained its position as the most valuable bank for the ninth consecutive quarter, reflecting resilient performance amid evolving economic landscapes, reveals GlobalData.

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Murthy Grandhi, Company Profiles Analyst at GlobalData, said, “Bullish investor sentiment is driven by an expected interest rate cut by the Federal Reserve in September 2024. The US economy, on the other hand, has shown resilience, with real GDP growth rising to 2.5% in 2023 from 1.9% in 2022. It is projected to grow by 2.1% in 2024 even after GDP declined to 1.4% in Q1 2024 from 3.4% in Q4 2023.”

“The Federal Reserve’s 2.1% GDP growth projection for 2024 suggests a potential soft landing, with inflation nearing the 2% target. Overall, investors remain optimistic about banking stocks as central bank rates in the range of 5.25-5.5% stabilize deposit costs, thus easing net interest margin pressure. A strong economy and expected modest improvement in lending could offer stable net interest income for banks,” he added.

Grandhi concluded that the performance of global banks in the second half of 2024 will be shaped by several key factors, including economic conditions, monetary policies, and inflation. Geopolitical factors, including trade tensions and conflicts, could affect international operations and market stability. Regulatory scrutiny, as seen with TD Bank, will also impact strategic initiatives and performance. Overall, while challenges remain, the combination of potential rate cuts, economic resilience, and technological progress may benefit global banks.

Published on: Jul 12, 2024 2:53 PM IST
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