A key focus for investors in the results declared by leading private banks including HDFC Bank, Kotak Mahindra Bank and Axis Bank is to understand the local impact of the Middle East crisis on the performance of these institutions in the June 2026 quarter.
Of equal importance, investors are also keen to understand how these leading banks managed the net interest margin (NIM) pressure along with their performance on other operational parameters.
Core banking performance – balancing credit growth with deposits in the June 2026 quarter
HDFC Bank, the largest private sector bank, grew its advances by nearly 15.6% y-o-y to Rs 30.37 lakh crore, and the bank has highlighted small and mid-market enterprises loans grew by 18.7% y-o-y in the quarter under review.
Smaller rival, Kotak Mahindra Bank highlighted its advances grew 15% y-o-y to Rs 5.12 lakh crore in the June 2026 quarter, and that was also thanks to a 20% y-o-y growth in higher margin SME loans to Rs 1.22 lakh crore in the quarter under review.
And Axis Bank grew its advances by 19.1% y-o-y to Rs 12.61 lakh crore in Q1FY27, and its SME loans grew 25% y-o-y.
Credit growth is an operational parameter of a bank that is keenly tracked.
The June quarter is typically a ‘slack’ season for credit, with individuals, small and large companies still evaluating their financial objectives for the new financial year. Also, it is a quarter where a large number of families are on holiday and demand for credit is typically slack.
The strong double digit loan growth of these leading private banks in the June 2026 quarter is commendable. For perspective, in the June 2025 quarter, HDFC Bank grew its advances by 6.7% y-o-y to Rs 26.28 lakh crore, and the bank had been careful in growing its loan book, since its credit-to-deposit ratio was nearly 95.1% in the June 2025 quarter.
Core operational performance of HDFC Bank v/s Kotak Mahindra Bank v/s Axis Bank in the June 2026 quarter
| Bank name | Growth in lending (% change y-o-y) | Growth in deposits (% change y-o-y) | Net Interest Margin (%) |
| HDFC Bank | 15.6% | 14.9% | 3.4% (on interest earning assets) |
| Kotak Mahindra Bank | 15% | 12% | 4.5% |
| Axis Bank | 19.1% | 18.2% | 3.6% |
Of equal importance, HDFC Bank grew its deposits by 14.9% y-o-y to Rs 31.67 lakh crore in the June 2026 quarter, and that was led by a 17.4% y-o-y rise in term deposits (mainly fixed deposits) to Rs 21.45 lakh crore in the quarter under review.
Meanwhile, Kotak Mahindra Bank grew its deposits by 12% y-o-y to Rs 5.72 lakh crore in the June 2026 quarter, and that was thanks to a 14% y-o-y rise in term deposits to Rs 3.41 lakh crore in the quarter under review.
And Axis Bank grew its deposits by 18.2% y-o-y to Rs 13.72 lakh crore in Q1FY27, and it was owing to a 21% rise in term deposits.
Deposits form the basis of extending credit for a bank, short and long-term to clients.
Managing the NIM pressure in the June 2026 quarter
Net Interest Margin (NIM) is another key operational metric tracked by investors. For HDFC Bank, its NIM was 3.40% based on interest earning assets in the June 2026 quarter as compared to 3.5% a year earlier.
Meanwhile, Kotak Mahindra Bank has highlighted that its NIM was broadly flat — 4.5% in the June 2026 quarter as compared to 4.65% a year earlier.
And Axis Bank has highlighted its NIM was 3.6% in Q1FY27 as compared to 3.9% a year earlier.
Over the past several quarters, banks have focused on expanding loans to retail and SME sectors as it enables them to earn a higher NIM vis-à-vis top level corporates.
The RBI has taken several steps to boost lending in the broader banking system and this includes the cut in repo rates in early December 2025. This in turn has put a temporary pressure on NIMs of banks, like HDFC Bank, Kotak Mahindra Bank and Axis Bank.
Asset quality remains strong in the June 2026 quarter
In the June 2026 quarter there was no visible local impact from the Middle East crisis, in terms of a rise in NPA levels.
For HDFC Bank, its % of net NPAs to net advances was 0.41% in the June 2026 quarter as compared to 0.47% a year earlier.
Its provisions were Rs 3,059.7 crore in Q1FY27 as compared to Rs 14,441 crore a year earlier, since HDFC Bank had made a floating provision of Rs 9,000 crore for FY26. HDFC Bank had also made a gain of Rs 9,128 crore in the June 2025 quarter from the offer for sale related to IPO of HDB Financial Services.
HDFC Bank’s tax expenses jumped 93% y-o-y to Rs 6,048 crore in the June 2026 quarter, and as a result, its standalone net profit rose just 5 % y-o-y to Rs 19,059 crore in the quarter under review.
Meanwhile, Kotak Mahindra Bank’s % of net NPA to net advances was 0.27% in the June 2026 quarter as compared to 0.34% a year earlier. Its provisions were Rs 668 crore in the June 2026 quarter as compared to Rs 1207.7 crore a year earlier. A fall in provisions enabled Kotak Mahindra Bank’s standalone net profit rise 25.6% y-o-y to Rs 4,123 crore in the June 2026 quarter.
And Axis Bank’s % of net NPAs was 0.39% in the June 2026 quarter as compared to 0.45% a year earlier year. Its provisions were Rs 2222.5 crore in the June 2026 quarter as compared to Rs 3,947.6 crore a year earlier.
Lower provisions helped Axis Bank helped its standalone net profit rise 22.5% y-o-y to Rs 7113.9 crore in the June 2026 quarter.
HDFC Bank, Kotak Mahindra Bank and Axis Bank’s core banking operations are reflected in their respective standalone results.
Return on Assets (RoA) – Which bank is the most efficient?
HDFC Bank’s return on assets (average) – not annualized was 0.46% in the June 2026 quarter, and on annualizing it would be nearly 1.8%
For Kotak Mahindra Bank, its return on average assets – (not annualised) was 0.53% in the June 2026 quarter, and on annualizing it would be nearly 2.1%.
And Axis Bank’s RoA (annualized) was 1.5% in the June 2026 quarter.
| Return on assets (in %) | |
| HDFC Bank | 1.8%* |
| Kotak Mahindra Bank | 2.1%* |
| Axis Bank | 1.5% |
Source – Company results and investor presentation
Growth outlook
Investors will continue to watch the local impact of the Middle East crisis on HDFC Bank, Kotak Mahindra Bank and Axis Bank, amongst other banks, in terms of rise in NPAs, NIMs and any signs in slowdown in credit growth, going forward.
HDFC Bank has tried to address corporate governance concerns with the recent appointment of Rajiv Kumar as part-time chairman of the bank, and he has also got RBI approval.
For Kotak Mahindra Bank, investors will be closely watching the appointment of the new MD and CEO, given the announcement of 27 June, 2026, that Mr. Ashok Vaswani, Managing Director & CEO of the Bank, that for personal reasons he does not wish to seek re-appointment upon completion of his current term on December 31, 2026.
Valuations – does it still make sense to invest in private bank shares?
HDFC Bank trades on the preferred valuation matrix – price to (standalone) book value of 2.2 times. Over the past 5 years, it has traded between 2.1 times and 4.3 times.
Kotak Mahindra Bank trades on the above valuation matrix at 2.9 times, and over the past 5 years, it has traded between 2.9 times and 6.8 times.
HDFC Bank v/s Kotak Mahindra Bank v/s Axis Bank valuations
| Bank | Price to (standalone) book value |
| HDFC Bank | 2.2 times |
| Kotak Mahindra Bank | 2.9 times |
| Axis Bank | 1.95 times |
Axis Bank trades on the above valuation matrix at 1.95 times, and over the past 5 years, it has traded between 1.7 times and 3.1 times.
The three leading private bank stocks are trading close to the lower end on the above valuation matrix. Readers could add these stocks to their watch list for 2026.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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