The earnings season is gathering pace. While several companies have already announced their June-quarter (Q1FY27) numbers, the spotlight is now shifting to one of the market’s most closely watched sectors -banking.
Why are bank earnings so important? Because banks sit at the centre of the economy.
With HDFC Bank, ICICI Bank and several other lenders set to report their Q1FY27 earnings, leading brokerage houses including JM Financial, Motilal Oswal, BNP Paribas and Emkay have shared their outlook on the sector.
Here’s a look at what brokerages are saying ahead of the banking sector’s Q1FY27 report card.
Banking sector outlook: What are brokerages expecting?
According to the brokerage report by JM Financial, banks are expected to report a healthy June quarter, with around 14% year-on-year growth in Profit After Tax (PAT) despite continued pressure on Net Interest Margins (NIMs).
JM Financial in its report added, “We expect banks to report a healthy quarter with ~14% YoY PAT growth in Q1FY27, supported by healthy business growth and stable asset quality, although earnings will continue to face pressure from NIM compression.”
As per the brokerage house report, loan growth across 28 banks stood at around 16.4% year-on-year, while deposits grew about 12.3%, indicating that credit demand continues to outpace deposit mobilisation.
JM Financial added that treasury income could improve because of softer bond yields, while operating expenses are expected to remain under control as banks benefit from better operating leverage.
Meanwhile, Emkay expects several private sector lenders to post healthy profitability during the quarter. According to the brokerage report, Axis Bank, HDFC Bank, IndusInd Bank and IDFC First Bank are likely to report healthy earnings. Among public sector banks, Canara Bank and Indian Bank are expected to outperform, while State Bank of India could report a relatively moderate quarter.
HDFC Bank Q1FY27 Preview: Brokerages continue to favour country’s largest private lender
Among all the banks under coverage, HDFC Bank continues to attract the strongest conviction from brokerages.
JM Financial: Healthy earnings despite margin pressure
JM Financial in its report noted that HDFC Bank is expected to deliver healthy business growth during the June quarter even though margins may witness some pressure.
The brokerage expects the bank’s Net Interest Margin to decline by around two to three basis points sequentially, largely because of funding costs and the shift towards lower-yield loan segments.
However, stable asset quality and healthy credit growth are expected to support earnings.
JM Financial continues to remain constructive on banks with strong liability franchises and execution capabilities, with HDFC Bank remaining among its preferred large private lenders.
Motilal Oswal: Deposit franchise and asset quality remain key strengths
Motilal Oswal also remains positive on HDFC Bank.
The brokerage house in its report, added that the bank has continued to see a healthy loan growth across corporate, Small and Medium Enterprise (SME) and retail segments. Meanwhile, deposit mobilisation remains strong through branch expansion and a strong liability franchise.
“We expect a ~14% CAGR in deposits over FY26-28,” added the brokerage house report
The brokerage believes margins should improve gradually as expensive borrowings continue to decline.
“We estimate HDFC Bank to deliver a loan CAGR of 14.1% over FY26-28, alongside an earnings CAGR of 14.2%,” added the brokerage house report.
Motilal Oswal also expects improving operating leverage, supported by higher employee productivity, digital investments and greater use of Artificial Intelligence (AI).
BNP Paribas: HDFC Bank remains the top banking pick
BNP Paribas has retained HDFC Bank as its preferred banking stock.
“HDFC Bank is our top pick within our banking coverage,” the report noted.
BNP Paribas further noted that the bank’s current valuation still does not fully reflect its long-term earnings potential. BNP Paribas expects Return on Assets (ROA) to improve to around 1.8% by FY27, while Return on Equity (ROE) is expected to move closer to pre-merger levels by FY28.
The brokerage believes stronger Current Account Savings Account (CASA) growth remains one of the biggest catalysts for further earnings upgrades.
ICICI Bank Q1FY27 Preview: Strong operating performance expected to continue
ICICI Bank is another large private lender that continues to receive positive commentary from brokerages ahead of its June-quarter earnings.
Motilal Oswal: Growth momentum remains intact
According to the Motilal Oswal report, ICICI Bank continues to deliver broad-based loan growth across retail, SME and business banking segments.
“ICICI Bank continues to deliver consistent operating performance, aided by broad-based loan growth, robust asset quality and industry-leading profitability,” added the report
Motilal Oswal expects the lender to continue benefiting from healthy deposit growth, improving asset quality and one of the strongest profitability profiles among private sector banks.
BNP Paribas: Funding advantage supports earnings
BNP Paribas also remains constructive on ICICI Bank.
According to the brokerage report, “ICICI Bank’s balance sheet remains protected by heavy excess provisioning and healthy capitalisation.”
The brokerage believes the lender’s continued investments in technology and digital banking, along with its healthy funding profile, should help sustain profitability even if industry-wide margin pressure persists.
Other banks to watch this earnings season
While HDFC Bank and ICICI Bank remain the preferred large private banking names, brokerages have also highlighted several other lenders ahead of the June-quarter earnings season.
According to JM Financial, Axis Bank, State Bank of India, Ujjivan Small Finance Bank, DCB Bank and City Union Bank remain its preferred picks because of their healthy liability franchises and business momentum.
Emkay expects Axis Bank, IndusInd Bank and IDFC First Bank to report healthy profitability among private lenders, while Canara Bank and Indian Bank are expected to outperform within the public sector banking space.
What investors need to watch
While margin pressure is expected to remain one of the biggest themes this quarter, brokerages continue to believe that India’s leading private banks are well positioned because of healthy loan growth, stable asset quality and improving deposit mobilisation.
Among them, HDFC Bank continues to emerge as the strongest brokerage favourite, with both Motilal Oswal and BNP Paribas maintaining a positive long-term view. ICICI Bank also remains firmly on analysts’ radar because of its consistent earnings profile and strong balance sheet.
Disclaimer: The stock-specific forecasts, ratings, and market projections compiled in this report represent the independent opinions of the respective brokerage houses and do not constitute an offer, solicitation, or investment advice by this publication. Equity investments are subject to market risks, and past brokerage performance or consensus targets do not guarantee future returns. Readers are strongly advised to conduct their own due diligence and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.
