ICICI Bank Vs HDFC Bank Vs Axis Bank: 5 factors to watch out for after Q1

Banking sector: Q1 snapshot

ICICI Bank delivered the strongest profit growth among its peers, with profit after tax rising to Rs 14,805 crore from Rs 12,772 crore a year earlier, supported by broad-based loan growth and higher operating income. Axis Bank maintained robust balance-sheet expansion, with advances increasing 19% year-on-year to Rs 12,61,557 crore and deposits growing 18%, while HDFC Bank reported net interest income rising 6.67% year-on-year to Rs 33,533.95 crore and profit after tax increasing 4.98% to Rs 19,059.72 crore, although operating profitability remained under pressure.

Across all three earnings calls, management teams struck a similar tone. Rather than relying on wider lending spreads to drive earnings, they highlighted customer acquisition, deposit mobilisation, productivity improvements and disciplined underwriting as the key levers for sustaining growth through FY27.

ICICI Bank vs Axis Bank vs HDFC Bank: Margin expansion has taken a back seat

The June quarter underscored a changing operating environment for private sector banks. As policy rate cuts feed into lending yields faster than funding costs, management teams are increasingly focused on protecting profitability through business growth and operating efficiency instead of expecting a sharp recovery in margins.

Axis Bank offered the clearest assessment of the margin outlook. The bank reported a net interest margin (NIM) of 3.46% in Q1 FY27 and said it expects the current quarter to mark the bottom of the cycle. Amitabh Chaudhry, Managing Director and Chief Executive Officer, Axis Bank, said during the earnings call, “Our NIM for Q1FY27 at 3.46% is our cycle bottom. With the FCNR(B) deposits opportunity, in the near term we will focus on growth and deployment of the additional liquidity raised through this route.” 

ICICI Bank also operated in the same interest-rate environment but continued to deliver strong operating performance. Net interest income increased 12.7% year-on-year to Rs 24,384 crore, while core operating profit rose 15.6% to Rs 20,235 crore.

 Rather than focusing on margin expansion, Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank, reiterated that the bank remains focused on strengthening its core operating business. “At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury through the 360-degree customer-centric approach and by serving opportunities across ecosystems and micro markets,” he said.

HDFC Bank’s results reflected a similar trend. Net interest income increased to Rs 33,533.95 crore from Rs 31,437.97 crore, while NIM remained unchanged at 3.26% from both the previous quarter and the year-ago period. However, pre-provision operating profit declined 21.17% year-on-year to Rs 28,168.06 crore, and the operating profit margin contracted to 30.56% from 36.02%, highlighting continued pressure on profitability.

Despite that backdrop, Sashi Jagdishan, Chief Executive Officer, HDFC Bank Limited, indicated that the bank remains focused on strengthening the franchise rather than chasing short-term margin gains. “The deposit growth continues to be relatively better than the historical Q1 trends. We continue to gain market share both on an incremental basis and on a stock basis as well,” he said. 

Taken together, the commentary suggests that margin expansion is no longer the primary earnings driver for India’s largest private lenders. Instead, profitability is increasingly being supported by stronger funding franchises, higher operating efficiency and sustained business growth.

ICICI Bank vs Axis Bank vs HDFC Bank : Strong Q1 credit demand 

Even as margins remain under pressure, credit demand continued to provide a solid foundation for earnings during the June quarter. All three banks reported healthy lending activity across retail, SME and corporate segments, although each emphasised different growth opportunities.

ICICI Bank reported total loans increasing 19.6% year-on-year and 5.0% sequentially as on June 30, 2026. Retail loans grew 12.0%, business banking advances expanded 28.2%, while domestic corporate loans increased 18.5%. The bank also reported profit before tax excluding treasury rising 20.9% year-on-year to Rs 18,975 crore, while core operating profit increased to Rs 20,235 crore.

Highlighting the operating performance, Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank, said, “The profit before tax, excluding treasury, grew by 20.9% year-on-year to INR 189.75 billion in this quarter. The core operating profit increased by 15.6% year-on-year to INR 202.35 billion in this quarter.” The remarks reinforced the bank’s focus on sustainable earnings through broad-based business growth rather than treasury gains.

Axis Bank also maintained strong lending momentum. Advances increased 19% year-on-year to Rs 12,61,557 crore, driven by 38% growth in wholesale banking, 25% growth in SME lending and 8% growth in retail advances. Summarising the quarter, Amitabh Chaudhry, Managing Director and Chief Executive Officer, Axis Bank, said, “Our growth momentum remained firmly intact during the quarter as we continue to gain market share across advances and deposits both on a YoY and QoQ basis.” 

HDFC Bank also expressed confidence in the lending environment despite competitive conditions. Profit after tax increased to Rs 19,059.72 crore, while wholesale banking revenue grew 8.66% year-on-year to Rs 48,670.85 crore.

Looking ahead, Sashi Jagdishan, Chief Executive Officer, HDFC Bank Limited, said the bank is preparing to accelerate growth. “Advances, as we had envisioned a while ago, I think we are on the verge of pressing the pedal,” he said. 

Jagdishan also noted that “there is a very healthy credit demand that we are seeing in the system as we speak.” 

Across all three lenders, the June quarter reinforced that healthy credit demand continues to offset the impact of softer margins. While the sources of growth vary across institutions, retail, SME and corporate lending remain central to sustaining earnings momentum in FY27.

ICICI Bank vs Axis Bank vs HDFC Bank: Q1 deposit growth a key differentiator

If there was one clear takeaway from the June quarter, it was that deposit mobilisation has become just as important as loan growth. As lending rates reprice faster than funding costs, banks with stronger liability franchises are better positioned to protect margins while continuing to expand their loan books.

ICICI Bank maintained healthy momentum on the liability side. Period-end deposits increased 14.0% year-on-year, while average deposits also grew 14.0%. The bank reported average current and savings account (CASA) deposits rising 12.1% year-on-year and 4.7% sequentially, demonstrating continued traction in low-cost deposits despite intense competition.

Discussing deposit growth during the earnings call, Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank, said, “Total deposits grew by 14% year-on-year and 2.2% sequentially. Average deposits grew by 14% year-on-year and 6.1% sequentially, and average current and savings account deposits grew by 12.1% year-on-year and 4.7% sequentially during this quarter.” The management reiterated that expanding customer relationships across ecosystems and micro-markets remains central to strengthening the bank’s funding franchise.

Axis Bank reported the strongest deposit growth among the three lenders. Total deposits increased 18% year-on-year to Rs 13,72,936 crore, while term deposits grew 21%, current account deposits increased 13%, savings account deposits rose 14%, and CASA deposits expanded 13%. The stronger liability profile also helped reduce the cost of funds by 35 basis points year-on-year.

Highlighting the bank’s strategy, Amitabh Chaudhry, Managing Director and Chief Executive Officer, Axis Bank, said, “Our efforts remain focused on further strengthening the deposit franchise through increased granularization and a more stable liability mix, supporting a resilient and well-diversified funding base.”

HDFC Bank also continued to prioritise deposits as the foundation for future growth. Although its CASA ratio moderated to 32.30% from 32.80% a year earlier, management remained optimistic about liability growth.

During the earnings call, Sashi Jagdishan, Chief Executive Officer, HDFC Bank said, We continue to gain market share both on an incremental basis and on a stock basis as well.” He added that the bank’s long-term investments in distribution and customer acquisition are helping improve franchise quality, positioning it well for the next phase of growth.

The June quarter showed that while loan growth remains healthy, deposit mobilisation has become the key competitive advantage for banks seeking to sustain profitability in a lower-rate environment.

ICICI Bank vs Axis Bank vs HDFC Bank: Asset quality and capital remain key strength

Despite maintaining healthy credit growth, all three banks continued to report resilient asset quality, reflecting disciplined underwriting and conservative risk management.

ICICI Bank remained among the strongest performers on this front. Gross non-performing assets (GNPA) stood at 1.67%, while net NPA remained at 0.35% as of June 30, 2026. The bank maintained a provision coverage ratio of 74.7%, with total provisions, excluding tax, of Rs 22,963 crore, providing a comfortable buffer against potential credit stress.

Axis Bank also delivered stable credit quality. Gross NPA improved to 1.28% from 1.54% a year earlier, while net NPA declined to 0.39% from 0.41%. The bank reported a credit cost of 0.63% and maintained a provision coverage ratio of 70%, while total coverage, including specific, standard and additional provisions, stood at 161% of gross NPAs, underlining the strength of its balance sheet.

HDFC Bank’s asset quality remained healthy despite a slight sequential uptick. Gross NPA stood at 1.17%, improving from 1.40% a year earlier, while net NPA declined to 0.41% from 0.47%. Sequentially, GNPA increased by two basis points and NNPA by three basis points, but both ratios remained among the lowest in the industry.

Strong capital positions further reinforced the resilience of all three lenders. ICICI Bank reported a Capital Adequacy Ratio (CAR) of 16.84%, including a Common Equity Tier 1 (CET1) ratio of 16.19%. Axis Bank’s CAR stood at 16.67%, with a CET1 ratio of 14.64%, while management highlighted that the quarter generated an additional 52 basis points of capital, strengthening its growth capacity. HDFC Bank also remained comfortably capitalised, allowing it to continue investing in technology, branch expansion and customer acquisition while supporting future credit growth.

ICICI Bank vs Axis Bank vs HDFC Bank : Management  optimistic despite margin pressure

Although all three lenders acknowledged the pressure on margins, their outlook for FY27 remained constructive, supported by healthy credit demand, improving deposit franchises and continued investment in productivity.

ICICI Bank maintained that its strategy will remain focused on expanding customer ecosystems, strengthening operating profitability and delivering sustainable growth across retail, business banking and corporate lending. Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank, reiterated that the bank’s priority is to grow profit before tax excluding treasury, signalling a continued focus on core banking operations rather than earnings driven by market movements.

Axis Bank also expressed confidence that margin pressure is likely to ease gradually. Amitabh Chaudhry, Managing Director and Chief Executive Officer, Axis Bank, said the bank believes Q1 FY27 represents the cycle bottom for margins, while stronger funding costs and better liquidity should support a gradual improvement in profitability over the coming quarters. Management also expects continued market share gains in both advances and deposits through disciplined execution.

HDFC Bank struck a similarly confident tone on business growth. Sashi Jagdishan, Chief Executive Officer, HDFC Bank Limited, said, “Productivity at the branch continues to move up, and we realize benefits of the investments that we’ve done over the last five, six years.” He also noted that the bank continues to witness healthy credit demand, while its investments in technology, distribution and customer relationships are beginning to translate into stronger operating leverage.

The June quarter demonstrated that India’s three largest private sector banks are adapting to a changing interest-rate cycle rather than waiting for margins to recover. While wider lending spreads are unlikely to provide the same boost to earnings as in recent years, healthy loan demand, resilient asset quality, strong capital buffers and improving deposit franchises continue to support long-term growth. Although each bank is pursuing its own strategy, ICICI Bank, Axis Bank and HDFC Bank appear aligned on one point: sustainable earnings in FY27 will depend less on interest-rate movements and more on execution, customer relationships and disciplined balance-sheet management.

Conclusion

The June quarter marked an important shift for India’s private banking sector. While earnings remained resilient, management commentary from ICICI Bank, Axis Bank and HDFC Bank made it clear that the next phase of growth will depend less on expanding net interest margins and more on execution.

 Strong credit demand, improving deposit franchises, disciplined underwriting and operating efficiency are emerging as the key drivers of profitability as lower interest rates reshape the operating environment.

Disclaimer: The financial data, earnings analysis, and commentary presented above are for informational and educational purposes only and do not constitute financial advice or investment recommendations. Financial Express advises users to consult with certified financial advisors before making any investment decisions based on bank earnings or market trends.