SBI vs HDFC Bank Q1 results: Who fared better in June quarter earnings?

The Q1FY26 earnings are at the tail end of the season, as the majority of the companies have reported their Q1 earnings. Overall earnings for the Q1FY26 remained muted, with large companies reporting dented margins and flat-to-negative profitability growth. Sectorally, the IT sector earnings remained weakest amongst all, while Banking and FMCG sector earnings showed subdued but better performance in comparison to others.

In banking, the private sector banks reported major weakness in profitability due to high provisions and weak interest income growth. The trend was also similar in the public sector banks with low single-digit profitability growth. Here’s how the largest private sector bank, HDFC Bank and the largest public sector bank, State Bank of India, fared in Q1FY26 earnings.

Core income growth

The net-interest income growth for HDFC Bank grew 5.4% YoY to ₹31,400 crore as compared to ₹29,800 crore, while it remained subdued sequentially. For the State Bank of India, the net interest income remained flat at ₹41,072 crore. This was primarily due to weak and subdued interest income growth of -1.4% at ₹1.17 lakh crore vs ₹1.19 lakh crore in the previous year’s similar quarter. In comparison, the HDFC Bank reported superior core income growth, while the public sector bank failed to post strong performance.

Core business growth

The core business or the advances growth for HDFC Bank and SBI remained strong, with the retail category recording high double-digit growth. The State Bank of India’s gross advances growth was superior and above the industry average at 11.6% YoY to ₹42.5 lakh crore for Q1FY26. While HDFC Bank’s gross advances grew below the industry average at 8.3% YoY at ₹27.4 lakh crore. While the deposits growth for HDFC Bank was more superior at 16.4% YoY at ₹26.5 lakh crore. State Bank of India reported 11.6% YoY growth in deposits at ₹54.7 lakh crore.

The overall advances growth was propelled by strong retail advances category for both banks. While the corporate segment growth remained muted in low single digits for HDFC and SBI. For State Bank of India, gold personal loans saw nearly 79% YoY jump in advances, which is one of the key highlights from the Q1FY26 lending growth.

Asset quality

In terms of asset quality, State Bank of India showed superior performance with GNPA declining from 2.21% in Q1FY25 to 1.8% in Q1FY26 and the net NPA improved from 0.57% to 0.47% in the same period. Whereas, the asset quality for HDFC Bank elevated slightly at 1.4% vs 1.3% in the previous year’s similar quarter. On the other hand, net NPA also jumped 10 bps from 0.4% to 0.5%. The slight deterioration in the asset quality was primarily due to higher NPA in retail segment.

Core profitability

On the bottom-line front, both banks showed strong and similar growth at little over 12% YoY. HDFC Bank recorded a net profit of ₹18,100 crore as compared to ₹16,100 crore, where as SBI recorded ₹19,160 crore as against ₹17,035 crore. In comparison to both HDFC Bank’s sharp and exponential growth provisions by 355% YoY led to a 12% growth in net profit, which looks more superior than SBI’s profitability growth, which came at 21% YoY jump in the provisions.