Why ICICI grit beats HDFC gloss

The Street reacted differently to the September quarter (Q2FY26) results of India’s top private sector banks, HDFC Bank and ICICI Bank.

- Manish Joshi

HDFC’s stock remained flat, while ICICI's shares fell 3%. Investors may have been drawn to HDFC’s seemingly stronger net profit growth of 10.8% year-on-year (yo-y), compared with ICICI’s 5.2% rise.

However, this market response may have overlooked three key factors in their earnings.

The first is the quality of earnings, where ICICI outperformed HDFC in core operations. Adjusted for interest on income tax refunds, ICICI’s net interest margin (NIM) rose 3 basis points (bps) sequentially to 4.3% in Q2, while HDFC’s NIM fell 8 bps to 3.27%. ICICI’s margin expansion stems from the relatively faster repricing of liabilities on the lower side compared with HDFC.