ICICI Has Margin Edge Over HDFC

A spurt

- Manish Joshi

Margin compression has emerged as a shared pain for HDFC Bank Ltd and ICICI Bank Ltd. In the June quarter (Q1FY26), net interest margin (NIM) fell 11 basis points (bps) sequentially to 3.35% for HDFC Bank and 12 bps to 4.27% for ICICI Bank.

HDFC Bank reported NIM net of interest on income tax refunds, while we have adjusted ICICI Bank's NIM accordingly to make it comparable.

Though margin pain is likely to persist for both banks, ICICI Bank is on firmer footing as its NIM is nearly 90 bps higher. This simply means that as interest-earning assets grow for both banks, it is likely that the growth in net interest income (NII) will be faster for ICICI Bank owing to its higher margin. Its profit growth should be faster, too.