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HDFC Bank eyes revival after peers outperform

By Sohail Khan 31 August 2026, 12:39 am

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HDFC Bank eyes revival after peer outperformance
Synopsis

Sashidhar Jagdishan's tenure at HDFC Bank ends with operational strength but weak stock performance. The bank improved asset quality and loan book size during his leadership. However, peers like SBI and ICICI Bank generated better investor wealth. HDFC Bank's stock has fallen since its merger with HDFC. Future stock performance depends on leadership and addressing growth challenges.

Sashidhar Jagdishan's decision not to seek an extension will end his six-year tenure as the MD and CEO of the country's largest private sector bank by asset size and market capitalisation, marked by a contrast between operational resilience and disappointing shareholder returns.

Jagdishan strengthened the bank's asset quality, expanded loan book and broadly maintained return on assets, but this did not translate into superior stock performance amid mounting concerns over the extent of future growth and intense competition.

Also read: HDFC Bank’s next CEO faces growth and margin test

Peers including SBI and ICICI Bank have spruced up asset quality and improved return ratios over the past five years, which have helped in generating investor wealth. Whether HDFC Bank can regain the premium it once commanded on the bourses will depend upon how quickly it identifies a successor and how effectively the new leadership addresses the challenges.

Under Jagdishan who took charge on October 27, 2020, the bank's gross non performing assets (GNPA) ratio fell to 1.15% of gross advances as of FY26 from 1.32% as of FY21. The return on assets (ROA) has broadly held steady at around 1.96% during the period.

The peer group, too, has posted improving asset quality and return ratios. ICICI Bank's ROA improved by 90 basis points (bps) to 2.32% in FY26 from FY21, while SBI's rose by 64 bps to 1.12%, Axis Bank's RoA increased by 76 bps to 1.46%, and Kotak Mahindra Bank's gained 12 bps to 1.97% over the same period. Similarly, ICICI Bank's GNPA fell by 356 bps to 1.4% in FY26 from FY21, SBI's dropped by 349 bps to 1.49%, Axis Bank's by 247 bps to 1.23%, and Kotak Mahindra Bank's by 205 bps to 1.2%.

Also read: HDFC Bank CEO Sashidhar Jagdishan set to retire: Finance manager 'Sashi' who rose to corner office

While HDFC Bank's NIM declined to 3.38% in FY26 from 4.2% in FY21, peers have fared relatively better. ICICI Bank's NIM expanded by 63 bps to 4.32%, Kotak Mahindra Bank's rose by 19 bps to 4.6%, Axis Bank's increased by 6 bps to 3.62%, while SBI's contracted by 13 bps to 2.91% over the same period. Though, at ₹720 as of Friday, HDFC Bank's stock continues to trade above the level of ₹618 when Jagdishan took charge in 2020, it has fallen by around 15% since the merger with HDFC in July 2023. The peer group has delivered double-digit returns, most remarkably 83% by SBI and 53% by ICICI Bank over the past three years.

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