Q1 FY26 Bank Results: HDFC Bank vs ICICI Bank – Who Outperformed?
- Stay Informed With Sanil | Sanil Pinto
- Jul 20
- 5 min read
Updated: Jul 20
HDFC Bank vs ICICI Bank: Who had the better numbers?
India’s two largest private sector lenders, HDFC Bank and ICICI Bank, released their Q1 FY26 bank results on July 19. These early financials set the tone for the broader BFSI earnings season, with both banks reporting solid performances on revenue and profitability. However, deeper analysis reveals key divergences in margins, asset quality, and strategic direction that investors should closely examine.
India’s Top Private Banks Release Q1 FY26 Bank Results
The Q1 FY26 bank results reflect the strength of India’s financial sector, but also highlight post-merger challenges for HDFC Bank and the operational consistency of ICICI Bank. Here’s a snapshot of actual performance vs consensus estimates:
Financial Scorecard: Actuals vs Estimates
Metric | HDFC Bank | Estimates | ICICI Bank | Estimates |
Total Revenue (₹ Cr) | ₹99,200 | ₹98,700 | ₹51,451 | ₹50,890 |
Net Interest Income | ₹31,438 | ₹31,885 | ₹21,635 | ₹20,923 |
Net Profit (₹ Cr) | ₹18,155 | ₹17,385 | ₹12,768 | ₹11,747 |
Net Interest Margin | 3.35% | 3.40% | 4.34% | 4.25% |
Gross NPA | 1.40% | 1.33% | 1.67% | 1.69% |
Net NPA | 0.47% | 0.45% | 0.41% | 0.42% |
Provisions (₹ Cr) | ₹14,442 | ₹4,290 | ₹1,815 | ₹1,200 |
Return on Assets (RoA) | 0.48% | 0.54% | 2.44% | 2.12% |
Profitability: HDFC Bank vs ICICI Bank in Q1 FY26
Net Profit & Growth Momentum
In terms of absolute profit, HDFC Bank led with ₹18,155 Cr, exceeding estimates (₹17,385 Cr). However, ICICI Bank grew faster with a 15.5% YoY jump to ₹12,768 Cr, also beating street expectations (₹11,747 Cr).
Net Interest Margins (NIMs)
HDFC Bank reported a NIM of 3.35% (vs est. 3.40%), reflecting post-merger compression.
ICICI Bank posted a superior 4.34% NIM (vs est. 4.25%), indicating stronger core lending profitability.
Asset Quality Comparison: Q1 FY26 Earnings Face-Off
Gross and Net NPAs
ICICI Bank maintained strong asset quality: GNPA at 1.67%, NNPA at 0.41% – slightly better than expected.
HDFC Bank saw slight deterioration: GNPA rose to 1.40% (vs 1.33% QoQ), NNPA to 0.47%, reflecting macro caution.
Provisioning Trends
HDFC Bank sharply increased provisions to ₹14,442 Cr (vs est. ₹4,290 Cr), including floating and contingent buffers.
ICICI Bank’s provisions stood at ₹1,815 Cr (vs est. ₹1,200 Cr), showing prudent yet stable risk management.
Efficiency Metrics: Operating Leverage & Returns
Return on Assets (RoA)
HDFC Bank: RoA came in at 0.48%, affected by margin pressure and higher costs.
ICICI Bank: A significantly higher RoA of 2.44%, indicating better capital efficiency and profitability.
Cost-to-Income and Operational Efficiency
ICICI Bank continued to benefit from tight cost control and healthy operating leverage.
HDFC Bank’s post-merger cost-to-income ratio increased, but its retail and CASA franchise remain unmatched.
Management Commentary & Forward Guidance
HDFC Bank View
Management acknowledged the current period as a “transition year” post-merger.
Focus remains on stabilizing NIMs by FY27 and leveraging gains from the HDB Financial IPO.
Declared a ₹5 dividend and 1:1 bonus, indicating confidence despite short-term margin drag.
ICICI Bank Outlook
Projected strong loan/deposit growth in retail and SME segments.
Management emphasized that NIM compression is likely transitory.
Capital adequacy remains strong (CET1 at 16.31%) and CASA continues to improve.
Valuations & Target Price Outlook
Metric | HDFC Bank | ICICI Bank |
P/E (TTM) | 21.6 | 20.3 |
P/B | 2.77 | 2.98 |
Current Price | ₹1,959 | ₹1,427 |
Brokerages Target Price Range | ₹2,250–2,380 | ₹1,580–1,650 |
HDFC Bank trades at a slight premium, supported by scale and long-term retail dominance.
ICICI Bank’s better earnings delivery and growth momentum justify its valuation rerating potential.
Verdict: Who Won the Q1 FY26 Earnings Face-Off?
The Q1 FY26 Earnings Face-Off – HDFC Bank vs ICICI Bank clearly leans in ICICI Bank’s favor:
Delivered stronger earnings growth and margin quality.
Maintained better asset quality and provisioning discipline.
Beat estimates across key metrics while maintaining high RoA and NIM.
HDFC Bank remains a long-term compounder, but the ongoing merger integration, elevated provisions, and margin pressure signal near-term headwinds.
Investment Outlook: HDFC vs ICICI Bank in FY26
For Long-Term Investors
HDFC Bank: Accumulate on dips for structural retail leadership. Watch for margin recovery in FY27.
ICICI Bank: Strong Buy. Operational consistency, asset quality, and capital discipline support long-term compounding.
For Momentum Traders
ICICI Bank: Outperformance likely to attract FII flows and near-term price appreciation.
HDFC Bank: Expect near-term volatility pending clarity on margin normalization and post-merger efficiency.
Upside & Downside Risks
Upside Triggers:
Policy rate cuts, improved retail demand, faster synergy realization for HDFC.
Downside Risks:
Higher-than-expected NIM compression, slower credit demand, global macro shocks.
Conclusion: Q1 FY26 Earnings Face-Off – HDFC Bank vs ICICI Bank
ICICI Bank emerged as the clear winner in the Q1 FY26 Earnings Face-Off – HDFC Bank vs ICICI Bank, thanks to its consistent delivery, strong margin profile, and high RoA. For investors, ICICI presents near-term alpha, while HDFC remains a high-quality franchise to accumulate during corrections.
Which is your preferred bank this earnings season – HDFC Bank or ICICI Bank?Still unsure about which to back for your portfolio?
Write to us at info@wiremeshin.com for a personalized consultation.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Investing in shares carries significant risk, including loss of capital, illiquidity, and valuation uncertainty. Readers are strongly encouraged to consult a SEBI-registered financial adviser before making any investment decisions. The information provided is based on publicly available data and sources believed to be reliable as of the date indicated, but may change without notice.
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About The Author:
Sanil Pinto - Stay Informed With Sanil
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