HDFC Bank, ICICI Bank stable margins, benign asset quality adds sector comfort
Analysts expect ICICI Bank to continue commanding higher valuations among private banks, given its strong growth; while at HDFC Bank, clarity on the MD and CEO's succession will be a key monitorable ahead
- Apr 20, 2026,
- Updated Apr 20, 2026 2:03 PM IST
India’s top two private sector lenders – HDFC Bank and ICICI Bank – reported robust quarterly earnings on Saturday, April 18. Key numbers point to strong profit growth, stable net interest margins (NIM), while asset quality has further improved, prompting analysts to remain bullish on the two lenders and, as such, the broader sector.
Amid the current volatility in the stock market, in the wake of the US-Israel war on Iran, banking is one of the key sectors that analysts have had a positive view of. Generally, asset quality concerns have ebbed, although the impact of the conflict on certain sectors and small and medium industries will have to be watched for in the next quarter. Valuations have been reasonable as well. Growth in both deposits and advances has been good too; however, credit growth could see some slowdown should the war linger on for several months.
HDFC Bank, the country’s second largest lender, reported a 9% year-on-year increase in its January-March quarter net profit at Rs 19,221 crore, while net interest income rose 3.2% to Rs 33,082 crore. Meanwhile, ICICI Bank reported a standalone net profit of close to Rs 13,702 crore, up 8.5%, while net interest income rose 8.4% to Rs 22,979 crore.
More than the earnings, though, analysts have been hugely positive about the further improvement in asset quality and a sharp dip in provisions at ICICI Bank.
ICICI Bank’s “asset quality remained best-in-class with gross slippages (annualised) declining 37 basis points quarter-on-quarter, which led to credit cost falling by 24 bps to just 3 bps along with higher recoveries from written-off accounts,” pointed out analysts at JM Financial Institutional Securities.
“Given its sector-leading loan growth, better NIM management and strong asset quality trends, ICICI Bank shall continue to command a premium valuation among large banks,” the analysts felt.
The performance was mixed on Monday. While ICICI Bank gained 1.7%, HDFC Bank shares opened lower compared to Friday’s close, but recovered the early losses to trade up 0.1% in late morning trades.
“ICICI Bank’s stock performance has been tepid in the past year, reflecting the broader derating across banking stocks amid persistent FII selling in recent months. With operating performance holding strong and growth gaining traction, we expect the bank to rerate gradually,” said analysts at Motilal Oswal Financial Services.
HDFC Bank shares were under pressure in March after its part-time chairman, Atanu Chakraborty, abruptly resigned, citing that certain actions were not in line with his values and ethics. Investors hope that the issue is behind them and would be looking forward to a new chairman’s appointment as well as seeking clarity on the tenure of MD and CEO Sashidhar Jagdishan, which comes up for renewal later this year.
HDFC Bank’s MD and CEO Sashidhar Jagdishan has backed interim chairman Keki Mistry to stay on beyond the mandated three-month period, although it will depend on the decision of other board members too, he told reporters on Saturday. Officials also said that the nomination and remuneration committee (NRC) and board were “seized up” of the matter concerning the term of Jagdishan.
Rohan Mandora, analyst at Equirus Securities, noted that amid current macroeconomic uncertainty and potential impact on systemic asset quality, HDFC Bank remained a preferred play, given comfortable valuations, ability to navigate NPA cycles better, and gradual easing of boardroom overhang, with no recent adverse news flow.
“While system credit growth is improving, HDFC Bank may see calibrated loan growth given its efforts on LDR (loan-to-deposit ratio) improvement. Consequently, the bank’s earnings trajectory hinges on operating leverage and mix improvement rather than balance sheet expansion. Operating leverage sustained from past investments, along with incremental revenue growth, should drive positive jaws over FY27-FY28, aiding 10 bps RoA (return on assets) expansion each year,” Mandora stressed.
Other analysts are equally bullish on HDFC Bank’s earnings growth ahead.
“The bank remains well positioned to sustain growth momentum, while maintaining a calibrated approach with a clear focus on risk-reward over aggressive growth,” said Dnyaanada Vaidya of Axis Securities, who pointed out that clarity on the current MD and CEO succession remains a key monitorable.
The two lenders, along with Axis Bank, are among the top banking picks for Santanu Chakrabarti of BNP Paribas Securities India.
BNP Paribas recently cut target prices for several banks amid the West Asia conflict, which is expected to impact loan growth. However, Chakrabarti noted that their thesis of an earnings growth revival for preferred private banks remained intact for FY2027, albeit limited to mid-teens.
Barring ICICI Bank and State Bank of India, all other large-cap banks it covered were trading at a “deep discount” to their respective historical averages, he noted.
India’s top two private sector lenders – HDFC Bank and ICICI Bank – reported robust quarterly earnings on Saturday, April 18. Key numbers point to strong profit growth, stable net interest margins (NIM), while asset quality has further improved, prompting analysts to remain bullish on the two lenders and, as such, the broader sector.
Amid the current volatility in the stock market, in the wake of the US-Israel war on Iran, banking is one of the key sectors that analysts have had a positive view of. Generally, asset quality concerns have ebbed, although the impact of the conflict on certain sectors and small and medium industries will have to be watched for in the next quarter. Valuations have been reasonable as well. Growth in both deposits and advances has been good too; however, credit growth could see some slowdown should the war linger on for several months.
HDFC Bank, the country’s second largest lender, reported a 9% year-on-year increase in its January-March quarter net profit at Rs 19,221 crore, while net interest income rose 3.2% to Rs 33,082 crore. Meanwhile, ICICI Bank reported a standalone net profit of close to Rs 13,702 crore, up 8.5%, while net interest income rose 8.4% to Rs 22,979 crore.
More than the earnings, though, analysts have been hugely positive about the further improvement in asset quality and a sharp dip in provisions at ICICI Bank.
ICICI Bank’s “asset quality remained best-in-class with gross slippages (annualised) declining 37 basis points quarter-on-quarter, which led to credit cost falling by 24 bps to just 3 bps along with higher recoveries from written-off accounts,” pointed out analysts at JM Financial Institutional Securities.
“Given its sector-leading loan growth, better NIM management and strong asset quality trends, ICICI Bank shall continue to command a premium valuation among large banks,” the analysts felt.
The performance was mixed on Monday. While ICICI Bank gained 1.7%, HDFC Bank shares opened lower compared to Friday’s close, but recovered the early losses to trade up 0.1% in late morning trades.
“ICICI Bank’s stock performance has been tepid in the past year, reflecting the broader derating across banking stocks amid persistent FII selling in recent months. With operating performance holding strong and growth gaining traction, we expect the bank to rerate gradually,” said analysts at Motilal Oswal Financial Services.
HDFC Bank shares were under pressure in March after its part-time chairman, Atanu Chakraborty, abruptly resigned, citing that certain actions were not in line with his values and ethics. Investors hope that the issue is behind them and would be looking forward to a new chairman’s appointment as well as seeking clarity on the tenure of MD and CEO Sashidhar Jagdishan, which comes up for renewal later this year.
HDFC Bank’s MD and CEO Sashidhar Jagdishan has backed interim chairman Keki Mistry to stay on beyond the mandated three-month period, although it will depend on the decision of other board members too, he told reporters on Saturday. Officials also said that the nomination and remuneration committee (NRC) and board were “seized up” of the matter concerning the term of Jagdishan.
Rohan Mandora, analyst at Equirus Securities, noted that amid current macroeconomic uncertainty and potential impact on systemic asset quality, HDFC Bank remained a preferred play, given comfortable valuations, ability to navigate NPA cycles better, and gradual easing of boardroom overhang, with no recent adverse news flow.
“While system credit growth is improving, HDFC Bank may see calibrated loan growth given its efforts on LDR (loan-to-deposit ratio) improvement. Consequently, the bank’s earnings trajectory hinges on operating leverage and mix improvement rather than balance sheet expansion. Operating leverage sustained from past investments, along with incremental revenue growth, should drive positive jaws over FY27-FY28, aiding 10 bps RoA (return on assets) expansion each year,” Mandora stressed.
Other analysts are equally bullish on HDFC Bank’s earnings growth ahead.
“The bank remains well positioned to sustain growth momentum, while maintaining a calibrated approach with a clear focus on risk-reward over aggressive growth,” said Dnyaanada Vaidya of Axis Securities, who pointed out that clarity on the current MD and CEO succession remains a key monitorable.
The two lenders, along with Axis Bank, are among the top banking picks for Santanu Chakrabarti of BNP Paribas Securities India.
BNP Paribas recently cut target prices for several banks amid the West Asia conflict, which is expected to impact loan growth. However, Chakrabarti noted that their thesis of an earnings growth revival for preferred private banks remained intact for FY2027, albeit limited to mid-teens.
Barring ICICI Bank and State Bank of India, all other large-cap banks it covered were trading at a “deep discount” to their respective historical averages, he noted.