HDFC Bank vs ICICI Bank vs Axis Bank: Here's how top private lenders fared in Q2

The country's top private lenders reported their second quarter earnings last week. HDFC Bank, India's largest private lender on Saturday reported an increase of 11% in its net profit while ICICI Bank reported an increase of 5% in its net profit. On the other hand, Axis Bank reported a decline of a decline of 26% in its net profit in September quarter.

HDFC Bank Q2

The bank's net interest income or difference between interest earned on loans and expended on deposits rose 5% to ₹31,552 crore in July-September period from ₹30,114 crore in the year-ago period.

HDFC Bank's provisions for bad loans increased sharply by 30% to ₹3,500 crore as against ₹2,700 crore in the year-ago period. The bank has made a floating provision of ₹9,000 crore in line with the board approved policy in the first half of current fiscal, the bank said in an exchange filing.

The bank's asset quality showed an improvement as its gross non-performing assets (NPA), as a percentage of total advances, improved to 1.24% from 1.36% in the year-ago period.

The Mumbai-based lender's net NPA came in at 0.42%. In absolute terms its gross NPAs were ₹34,289 crore as against ₹34,251 crore in the same period last year.

Global investment firms maintained their positive stance on HDFC Bank following the lender’s second quarter results, citing steady core performance, healthy loan growth and market share gains despite near-term pressure on margins.

CLSA, in its note, said that the bank’s Q2 NII and core profit before tax (ex-treasury) were broadly in line with estimates. Average deposit growth remained strong at 15%, while loan growth accelerated to 10% year-on-year, up from 7% in the previous quarter, aided partly by a base effect.

The quarterly average CASA ratio was sequentially stable after several quarters of decline, reflecting some stability in the deposit mix. CLSA noted that while FY25 was largely about raising any type of deposits to bring down the loan-to-deposit ratio (LDR), the bank is likely to be more selective in the type of deposits it raises in FY26. Net interest margin (NIM) moderated by 8 basis points (bps) sequentially, which was slightly better than CLSA’s expectations.

Morgan Stanley highlighted that deposit growth has moderated, but market share gains remain strong, and the bank’s asset quality is robust. It also noted that operating leverage is playing out, and NIMs have likely bottomed out unless there are significant policy rate cuts. The brokerage described Q2FY26 earnings as steady and expects stronger core pre-provision operating profit (PPoP) growth between FY26 and FY28, driven by loan market share gains.

Bernstein described Q2 as healthy, with 10% EPS growth and return on assets (RoA) remaining stable at 1.9%. It said many of HDFC Bank’s core metrics were similar to those seen at Axis Bank earlier in the week. NIMs declined by around 8 bps quarter-on-quarter compared to 7 bps at Axis, while cost control was solid at 6% YoY, versus Axis’s 5%.

ICICI Bank Q2

The bank's provisions (excluding provision for tax) were ₹914 crore in September quarter compared to ₹1,233 crore in the year-ago period.

The Mumbai-based lender's asset quality improved in September quarter as its gross non-performing assets (NPA), as a percentage of total advances, came down to 1.58% from 1.97% and its net NPA improved to 0.39% from 0.42% a year earlier.

In absolute terms gross NPAs were at ₹23,850 crore as against ₹27,121 crore in the year-ago period.

ICICI Bank's fee income grew by 10.1% year-on-year (YoY) to ₹6,491 crore in Q2 from ₹5,894 crore in previous financial year. Fees from retail, rural and business banking customers constituted about 78% of total fees in July-September period.

Global investment firms gave a mixed reaction to ICICI Bank’s Q2 performance. HSBC said that the bank’s operating performance was supported by stronger-than-expected net interest margin (NIM), lower credit costs, and healthy fee income. It made only marginal tweaks to earnings, as slower loan growth and higher operating costs were largely offset by NIM outperformance and benign credit trends. HSBC believes the bank’s premium valuations should sustain.

CLSA said that Q2 Pre-Provision Operating Profit (PPoP) and profit after tax (PAT) were better than estimates by 4% and 10%, respectively. However, it termed it “a good, but not a great quarter,” citing continued moderation in loan growth, which is now primarily driven by the Business Banking (BB) segment.

Morgan Stanley noted that out that ICICI has navigated asset quality and profitability challenges well. It delivered a NIM of 4.30% in Q2, despite a 100 bps cut in the repo rate. Morgan Stanley believes incremental loan spreads are near their trough and expects faster loan growth ahead, with QoQ momentum already showing green shoots.

Bernstein noted that ICICI continues to test the limits of its “margins at the expense of growth” strategy, with loan growth slowing to 10% YoY, similar to HDFC Bank, and deposit growth lagging system average at 8%. While this deliberate growth sacrifice and low provisioning have helped maintain a healthy 2.3% RoA, Bernstein flagged the sharp slowdown in growth as a concern, even as profitability remains strong.

Axis Bank Q2

Axis Bank last week reported net profit of ₹5,090 crore in the second quarter of current financial year, marking a decline of 26% from ₹6,918 crore in the same period last year.

The decline in profit came on the back of higher provisioning for bad loans as its provisions jumped 61% to ₹3,547 crore from ₹2,204 crore in the year-ago period.

Axis Bank's NII rose nearly 2% to ₹13,744 crore from ₹13,483 crore.

The Mumbai-based lender's asset quality remained largely stable in July-September period as its gross non-performing assets (NPA), as a percentage of total advances, came in at 1.46% compared with 1.44% in the same period last year.

In absolute terms, gross NPAs came in at ₹17,308 crore compared with ₹15,466 crore in the year-ago period.

CLSA in a note said that after adjusting for a one-off, its profit before tax was better than estimates, driven by better net interest income and pre-provision operating profit.

CLSA believes that the second quarter was a quarter of change in trend, as loan and deposit growth picked up and slippages came in lower than in the past few quarters.

Bernstein said that Axis Bank’s growth metrics showed sequential improvement, and asset quality witnessed a sharp recovery as slippages declined meaningfully quarter-on-quarter (QoQ).

“While credit costs remain elevated – albeit lower than the previous quarter – this is largely due to one-off provisions on agri advances, which could reverse in subsequent quarters. Encouragingly, underlying trends such as lower slippages and improving card additions suggest that asset quality stress may be nearing a bottom,” Bernstein noted.

HSBC in a note said that Axis Bank reported very strong results in loan growth, margins and asset quality, but one-off provisions were a disappointment.

However, it noted that earnings inflection was visible, and it raised FY26-28 estimated earnings per share (EPS) by 2.7-5.3% on stronger growth and lower credit costs.

Jefferies said that Axis Bank’s earnings were better than estimates, with key positives like better net interest margins (NIMs), a pickup in loan and deposit growth by 12% and 11%, respectively, and moderation in slippages and core credit costs.

JPMorgan said that the earnings miss in the second quarter was led by higher provisions on crop loans. But added that its asset quality is improving, with gross non-performing assets and slippages declining. JPMorgan added that its net interest margins (NIMs) remain stable while corporate loans are driving the overall loan growth.