ICICI Bank vs Federal Bank (2026): ROA, NIM, Growth, Valuation & Which Is Better?
Almost the same P/E. Roughly twice the ROA.
ICICI Bank versus Federal Bank creates one of the most useful valuation paradoxes in Indian banking right now.
Federal Bank has the faster earnings story.
Its Q1 FY2027 net interest income grew 26.06%.
Profit increased 36.57%.
NIM expanded 39 basis points year on year.
ICICI Bank's corresponding growth was slower:
NII +12.7%.
PAT +15.9%.
Yet ICICI earns approximately 2.49% ROA versus Federal Bank at 1.22%.
ICICI's ROE is 17.1% versus Federal Bank at 12.01%.
Then comes the surprising part.
On August 28, ICICI Bank traded around 18.24 times earnings.
Federal Bank traded around 18.15 times.
The market is therefore asking investors to pay almost the same current earnings multiple for two banks with radically different profitability levels.
Why can two banks trade at almost the same P/E when one earns twice the ROA?
Best-in-class ROA, high NIM, 17% ROE, low credit cost, strong capital and scale exceeding ₹18 lakh crore of deposits.
26% NII growth, 37% PAT growth, expanding NIM, faster CASA growth and a credible path toward higher future ROA.
ICICI's valuation is about durability. Federal Bank's valuation is about convergence.
ICICI Bank vs Federal Bank: Q1 FY2027 scoreboard
| Metric | ICICI Bank | Federal Bank | Current Reading |
|---|---|---|---|
| Q1 PAT | ₹14,805 Cr | ₹1,176.93 Cr | ICICI scale |
| PAT growth | +15.9% | +36.57% | Federal |
| NII | ₹24,384 Cr | ₹2,945.89 Cr | ICICI scale |
| NII growth | +12.7% | +26.06% | Federal |
| Fee income | ₹7,286 Cr, +23.5% | +21.71% YoY | Both strong |
| Period-end deposits | ₹18.34 lakh Cr | ₹3.20 lakh Cr | ICICI scale |
| Deposit growth | +14.0% | +11.37% | ICICI |
| Loans / gross advances | ₹16.31 lakh Cr | ₹2.81 lakh Cr | ICICI scale |
| Loan growth | +19.6% | +14.94% | ICICI |
| CASA | 38.1% average | 32.23% period-end | ICICI, definitions differ |
| Reported NIM | 4.36% | 3.33% | ICICI |
| ICICI underlying NIM ex tax-refund benefit | ~4.28% | 3.33% | ICICI |
| ROA | 2.49% | 1.22% | ICICI |
| ROE | 17.1% | 12.01% | ICICI |
| Approx. cost-to-income | ~38.1% | 52.50% | ICICI |
| GNPA | 1.38% | 1.52% | ICICI |
| NNPA | 0.35% | 0.18% | Federal |
| Provision coverage | 74.7% | 87.37% excl. technical write-offs | Federal |
| Reported credit cost | 0.32% | 0.41% | ICICI reported lower |
| Normalized ICICI credit cost | ~0.50% | 0.41% | Federal slightly |
| Capital adequacy | 16.84% | ~16.97% | Very close |
| CET1 / high-quality Tier 1 | 16.19% CET1 | 15.89% Tier 1 | ICICI |
| 28 Aug P/E | 18.24x | 18.15x | Almost identical |
| 28 Aug P/B | 2.74x | 2.14x | Federal cheaper book |
ICICI's 2.49% ROA is the benchmark Federal Bank is ultimately chasing
Bank investors often spend too much time comparing loan-growth percentages and too little time comparing what those loans ultimately earn.
ROA resolves that problem.
ICICI Bank:
2.49%.
Federal Bank:
1.22%.
ICICI currently earns more than twice Federal Bank's profit per rupee of assets.
That is a fundamental business-quality gap, not merely a difference in market capitalisation.
Why is ICICI's ROA so high?
The answer is a combination rather than one metric:
- 4%+ NIM.
- Strong fee income.
- Low operating-cost intensity.
- Low credit costs.
- Granular retail and business-banking assets.
- Efficient capital deployment.
This is why ICICI can continue producing strong profit growth even after reaching enormous scale.
Its Q1 growth is not slow by large-bank standards
Loans increased 19.6% year on year.
Deposits increased 14%.
Business banking grew more than 28%.
Rural loans grew strongly.
Mortgages also expanded double digits.
ICICI combines large-bank profitability with a growth rate that would still look aggressive at many smaller banks.
The loan-deposit growth gap is the main funding metric to watch
Loan growth:
19.6%.
Deposit growth:
14%.
The balance sheet can tolerate this for a period because ICICI has liquidity and capital buffers.
But sustained credit growth materially above deposit growth eventually raises the importance of liability pricing.
ICICI's margin remains exceptionally strong even after normalization
Reported NIM was 4.36%.
A small tax-refund-interest benefit added approximately eight basis points.
On an underlying basis, margin was therefore around 4.28%.
Federal Bank reported 3.33%.
Even after normalisation, ICICI retains almost a full percentage point of NIM advantage.
That margin gap provides a huge earnings cushion
If funding costs rise or credit costs normalise, ICICI starts with more spread income available to absorb the pressure.
Federal's 3.33% NIM is healthy.
ICICI's 4.28%-4.36% range is a different profitability architecture.
Federal Bank's strongest argument is that the gap is moving in the right direction
Federal's NIM increased 39 basis points year on year to 3.33%.
Cost of deposits declined 57 basis points to 5.21%.
CASA balances increased 18.26%, much faster than overall deposit growth of 11.37%.
This is precisely how a mid-sized bank improves structurally:
better liability mix first, higher NIM second, stronger ROA third.
NII growing 26% while advances grow 15% is a powerful signal
Federal Bank's NII expanded substantially faster than its asset base.
That means the bank is not relying only on balance-sheet expansion.
It is extracting more net interest revenue from the balance sheet it already owns.
This is an important quality distinction.
Federal's fee franchise is also broadening
Fee income increased 21.71% year on year.
Management has been building:
- wealth management.
- cards.
- transaction banking.
- commercial banking relationships.
- NR customer monetisation.
A stronger fee mix reduces dependence on NIM alone.
The NR franchise remains an underappreciated Federal Bank asset
NR deposits exceeded ₹1.05 lakh crore.
That is a substantial funding franchise for a bank with total deposits around ₹3.20 lakh crore.
It gives Federal a differentiated liability channel that many domestic mid-sized banks cannot easily replicate.
But ICICI still has far better operating efficiency
Approximate cost-to-income:
ICICI 38.1%.
Federal Bank 52.50%.
This is one of the largest differences in the comparison.
Federal loses roughly ₹14 more of every ₹100 of operating income to costs
That is why its higher NII growth has not yet produced ICICI-like ROA.
Federal's cost-to-income ratio is improving.
But the current absolute gap remains large.
This is the biggest operating-leverage opportunity in Federal's story.
Federal does not need to reach 38% cost-to-income
That would be unrealistic as an immediate target.
A sustained move below 50%, combined with:
- 3.3%-plus NIM.
- mid-teens advances growth.
- credit cost below 0.6%.
could lift ROA materially without needing another 35%-plus profit-growth year.
Asset quality gives each bank one clear victory
Gross NPA:
ICICI 1.38%.
Federal 1.52%.
ICICI has the cleaner gross recognised book.
Net NPA reverses the result.
Federal's 0.18% net NPA is exceptionally low
ICICI:
0.35%.
Federal:
0.18%.
Federal's provision coverage excluding technical write-offs rose to 87.37%.
This means far less recognised gross stress remains economically unprovided.
Federal's fresh stress indicators also improved
Fresh slippages fell 37.79% year on year.
The slippage ratio improved to 0.61%.
That matters because the bank is expanding higher-yielding segments including:
- commercial banking.
- vehicle finance.
- gold loans.
- LAP.
- credit cards.
ICICI's reported 0.32% credit cost needs one normalization
The bank benefited from a chunky recovery linked to a previously stressed asset.
Management indicated a more normalised credit-cost level was around 50 basis points.
Federal Bank reported 41 basis points.
On a normalized basis, Federal Bank's current credit cost is actually slightly lower.
This is important because it makes ICICI's ROA advantage even more impressive
ICICI is not simply producing 2.49% ROA because it has zero provisions.
Even if credit cost normalises toward 0.5%, the underlying franchise still generates much greater asset-level profitability.
ROE tells a similar story
ICICI Bank:
17.1%.
Federal Bank:
12.01%.
The ROE gap is smaller than the ROA gap because of differences in capital structure and leverage.
But it remains meaningful.
Federal's ROE needs to climb for a 2x-plus book valuation to compound comfortably
A bank trading around 2.14 times book with only 12% current ROE requires investors to believe future returns will rise.
That belief is not unreasonable given:
- margin expansion.
- cost improvement.
- strong fee growth.
- clean asset quality.
But the valuation already assumes a meaningful part of the improvement.
ICICI's 2.74x book multiple has a much stronger current ROE behind it
17.1% ROE does not make 2.74x book cheap.
It makes the premium easier to explain.
Investors are paying more for each rupee of ICICI equity because that equity currently produces substantially more profit.
The P/E comparison is where the relative-value case becomes unusual
August 28, 2026:
- ICICI Bank P/E: 18.24x.
- Federal Bank P/E: 18.15x.
- ICICI Bank P/B: 2.74x.
- Federal Bank P/B: 2.14x.
The P/B difference reflects ICICI's stronger ROE.
The near-identical P/E means investors are paying almost the same amount for each rupee of current trailing earnings.
At the same earnings multiple, ICICI currently offers much better earnings quality
ICICI combines:
- 2.49% ROA.
- 17.1% ROE.
- 4.3%-plus NIM.
- sub-40% cost-to-income.
- 1.38% GNPA.
- 16.19% CET1.
Federal offers much faster current growth.
That makes Federal's premium effectively a growth premium, not a current-profitability premium.
What must Federal do to justify the same P/E sustainably?
The cleanest route is:
- ROA moves toward 1.4%-1.5%.
- ROE moves toward 14%-15%.
- Cost-to-income falls below 50%.
- NIM remains above 3.3%.
- NNPA stays below 0.3%.
If these happen while earnings remain strong, Federal can grow into its current valuation.
What can make ICICI's valuation compress?
ICICI's biggest risk is not a turnaround failure.
It is that a best-in-class bank ceases to look best-in-class.
That could happen if:
- NIM falls materially.
- loan growth remains above deposit growth for too long.
- credit costs rise above normalised expectations.
- ROA falls toward 2% or below.
The current ICICI valuation is not pricing distress
18.24x earnings and 2.74x book still represent a quality-bank valuation.
The point is relative.
Federal Bank is being valued at virtually the same earnings multiple despite substantially lower current ROA.
That makes ICICI unusually competitive in this specific pair.
The Bull Run market snapshot shows Federal's growth story has already been rewarded heavily
| Bull Run Snapshot — 25 Aug 2026 | ICICI Bank | Federal Bank |
|---|---|---|
| Price | ₹1,422.70 | ₹346.95 |
| Market capitalisation | ₹10,15,947 Cr | ₹80,857 Cr |
| 1-month return | -0.71% | -2.07% |
| 3-month return | +11.79% | +20.09% |
| 6-month return | +1.27% | +15.84% |
| 1-year return | -0.73% | +77.91% |
| 52-week high | ₹1,480.00 | ₹371.70 |
| 52-week low | ₹1,187.60 | ₹188.40 |
| RSI 14 | 44.93 | 41.81 |
| Dividend yield | 0.78% | 0.37% |
| Bull Run Score | 42.3/100 | 43.9/100 |
The one-year return gap changes how investors should think about expectations
Federal Bank gained nearly 78% in Bull Run's dated snapshot.
ICICI was roughly flat.
This does not mean Federal is overvalued or ICICI is automatically cheap.
It means Federal enters the next several quarters with substantially more growth optimism already reflected in price.
ICICI's near-flat one-year return is unusual given the underlying quarter
The bank continues producing:
- mid-teens profit growth.
- near-20% loan growth.
- 2.5% ROA.
- strong capital.
A stock can remain flat even when the business grows because valuation started high or expectations shifted.
That disconnect is what makes the comparison commercially interesting.
The metric that matters most for Federal Bank
ROA.
Federal already has the earnings growth.
It already has margin expansion.
It already has excellent net NPA.
The next proof point is whether those improvements convert into a sustained ROA materially above 1.2%.
The metric that matters most for ICICI Bank
Deposit growth versus loan growth.
ICICI already has the profitability.
Its long-term ability to preserve 4%+ margins while growing loans near 20% depends on continuing to deepen granular funding.
What can break each thesis?
ICICI Bank
- Loan growth continues materially ahead of deposit growth.
- NIM falls materially below the current underlying 4.2%-plus level.
- Normalized credit costs move meaningfully above 0.5%.
- Business-banking growth creates future asset-quality pressure.
- ROA falls toward 2%, reducing the justification for its premium P/B.
Federal Bank
- NIM expansion stalls.
- Cost-to-income remains above 50%.
- Higher-yield chosen segments create delayed slippages.
- ROA remains near 1.2% while the stock stays above 2x book.
- Profit growth normalises much faster than investors expect.
ICICI Bank vs Federal Bank: current conclusion
Federal Bank is growing earnings faster.
ICICI Bank currently offers the stronger valuation-adjusted banking economics.
ICICI Bank vs Federal Bank FAQs
Which bank is larger?
ICICI Bank by more than five times on deposits and advances.
Which bank is growing profit faster?
Federal Bank, approximately 36.6% versus ICICI Bank at 15.9%.
Which is growing loans faster?
ICICI Bank at approximately 19.6% versus Federal Bank at 14.94%.
Which has higher NIM?
ICICI Bank by a wide margin, even after adjusting its reported 4.36% NIM for a small tax-refund-interest benefit.
Which has higher ROA?
ICICI Bank at approximately 2.49% versus Federal Bank at 1.22%.
Which has higher ROE?
ICICI Bank at approximately 17.1% versus Federal Bank at 12.01%.
Which has lower GNPA?
ICICI Bank at 1.38% versus Federal Bank at 1.52%.
Which has lower NNPA?
Federal Bank at 0.18% versus ICICI Bank at 0.35%.
Which has better operating efficiency?
ICICI Bank by a substantial margin.
Which stock is cheaper?
The P/E multiples are almost identical. Federal is cheaper on P/B, while ICICI currently earns substantially higher ROA and ROE.
Where can investors compare them on Bull Run?
Use the ICICI Bank stock page and Federal Bank stock page.
Research sources
Disclaimer
This article is educational and informational only. ICICI Bank's reported Q1 FY2027 NIM included a small benefit from interest on an income-tax refund; an underlying margin around 4.28% is therefore a more conservative comparison with Federal Bank. ICICI Bank's reported credit cost of approximately 0.32% also benefited from a chunky recovery, with management indicating a normalised level around 0.50%. Federal Bank's Q1 NII and PAT growth rates are unusually strong and should not automatically be extrapolated indefinitely. ICICI's CASA ratio cited here is an average-balance measure while Federal Bank's 32.23% is a period-end ratio, so the figures are directional rather than perfectly definition-matched. Credit losses from fast-growing portfolios can emerge with a lag. Bull Run market data is dated August 25, 2026; external valuation multiples are dated August 28. Nothing here recommends buying, selling or holding ICICI Bank, Federal Bank or any security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.