HDFC Bank vs ICICI Bank: From Interest income to asset quality, who fared better in Q1FY27?

Private banking stocks are in focus on Monday after a slew of quarterly earnings released over the weekend. Major private sector banks like HDFC Bank, Axis Bank, Kotak Mahindra Bank and ICICI Bank announced their Q1FY27 earnings over the weekend. The share price movement on Monday morning indicates a mixed reaction by investors for the private banking sector stocks, such as shares of HDFC Bank, Kotak Mahindra Bank and Axis Bank, fell as much as 5%. While shares of ICICI Bank jumped over 2.3%, outperforming its closest peers. The divergent sentiment between the top four private sector warrants a brief comparison of their quarterly earnings. Here is how HDFC Bank and ICICI Bank fared in their Q1 earnings, and which performed better.

Interest earnings

HDFC Bank, the country’s largest private sector bank, reported net interest income of ₹33,500 crore as compared to ₹31,400 crore, a 7% jump over the previous year’s same quarter. Meanwhile, the second-largest ICICI Bank posted a 12.5% YoY jump in net interest income at ₹24,384 crore as against ₹21,635 crore in Q1FY26. The outperformance of ICICI Bank was largely driven by superior growth in credit growth across all segments. Meanwhile, HDFC Bank’s higher interest expenses dented the overall net-interest income growth for the quarter.

Margins

At the primary level, the contraction in net-interest margin for HDFC Bank in Q1FY27 remains the key drag on the sentiment. HDFC Bank’s Q1FY27 net-interest margins contracted from 3.4% in Q4FY26 and Q1FY26 to 3.26% in Q1FY27. The contraction could be primarily driven by higher credit costs and lower yields on funds. HDFC Bank’s Q1FY27 yield on advances stood at 7.7%, down from 7.8% sequentially and 8.1% in Q1FY26. The cost of funds remained unchanged at 4.4%.

On the other hand, ICICI Bank saw a marginal improvement in net-interest margins at 4.36% as compared to 4.32% in Q4FY26 and 4.34% in Q1FY26. The steady growth came despite a fall in yields to 8.17% vs 8.62% in Q1FY26. On the other hand, ICICI Bank managed to post a major improvement in the cost of funds from 5.02% in Q1FY26 to 4.51% in Q1FY27, which cushioned the growth.

Asset quality

In terms of asset quality, ICICI Bank outperformed HDFC Bank with a major improvement in the GNPAs and NNPAs. HDFC Bank’s GNPA and NNPA remained steady at 1.2% and 0.4% for Q1FY27, unchanged for the past four quarters. Meanwhile, ICICI Bank has shown consistent improvement in the GNPA from 1.67% in Q1FY26 to 1.4% in Q4FY26 and 1.38% in Q1FY27. Similarly, the NNPA also improved from 0.41% to 0.35% in Q1FY27. Effectively, ICICI Bank now holds better asset quality