State Bank of India, HDFC Bank keep top slots in ranking as total assets grow

State Bank of India and HDFC Bank Ltd. remained the largest Indian banks by total assets as of March 31, according to S&P Global Market Intelligence, as the robust economic recovery in the country augmented the balance sheets of banks.

State Bank of India retained its top position after its assets increased 2.64% year over year to $725.08 billion. Owing to its proposed merger with Housing Development Finance Corp. Ltd., the pro forma assets of HDFC Bank rose 57.67% to $441.05 billion, enabling it to hold on to the second rank. ICICI Bank Ltd. secured the third spot, with total assets of $238.49 billion.

As part of a merger announced in April 2022, Housing Development Finance will amalgamate with HDFC Investments Ltd. and HDFC Holdings Ltd. before merging into HDFC Bank. The merger will likely conclude in July, according to comments by HDFC Bank CFO Srinivasan Vaidyanathan during an April 15 earnings call.

Indian banks are poised to continue gaining from the prevailing robust economic recovery in the country following a pandemic-induced slowdown. India's economy will expand 6% to 7% annually until 2026 at least, making it the fastest growing economy in Asia-Pacific and the fastest growing major global economy, according to S&P Global Ratings on May 25. Consequently, bank credit growth remained strong in the past few quarters, with data from the Reserve Bank of India indicating that credit growth of scheduled commercial banks increased to 15.0% as of March 24 from 9.6% a year earlier.

Owing to the strong credit growth across the board, the assets of 16 of the 20 Indian banks grew year over year. The Federal Bank Ltd. was the sole lender to ascend one slot in the ranking after expanding its total assets 9.47% year over year, supplanting Bank of Maharashtra in the 18th position, according to Market Intelligence data. The assets of Bank of Maharashtra grew 7.25%.

"Federal Bank has accelerated growth post-COVID with more confidence on its asset quality," said Anand Dama, head of banking, financial services and insurance at Emkay Global Financial Services. The bank also gained substantial market share in the mortgage market, bolstering its overall growth, Dama said.

No foreign lender

Mirroring a pattern seen in preceding years, no overseas bank could make the list of the 20 largest banks in India as of end-March.

"We believe that the Indian banking space will continue being dominated by domestic banks," said Dama, citing the regulatory climate and intrinsic dynamics of the country. Numerous foreign banks attempted expanding but failed to gain much traction.

As of Jan. 31, Standard Chartered PLC operated 100 branches in India, the most among overseas banks in the country, according to data from India's central bank, followed by Citigroup Inc. with 35 bank branches.

In March, Axis Bank Ltd. bought Citibank India's consumer businesses for 116 billion rupees, further cementing its position. Axis Bank expanded its total assets 3.9% year over year to $163.71 billion, securing seventh place.

Through its DBS Bank India Ltd. subsidiary, Singapore's DBS Group Holdings Ltd. operates 518 branches in India. As of Dec. 31, 2022, the banking subsidiary held total assets of about $12.53 billion, according to Market Intelligence data.