HDFC Bank, ICICI Bank set for steady loan growth in Q2

India's two largest private sector lenders, HDFC Bank and ICICI Bank, are set to announce their September quarter results on Saturday. Brokerages expect both banks to report steady loan growth, though net interest margins (NIMs) are likely to remain under pressure amid faster loan repricing and rising deposit costs.

- Subhana Shaikh

NIMs are expected to stay under pressure.

(MINT)

While deposit growth is expected to remain robust and asset quality stable, analysts anticipate muted profitability due to lower treasury income and margin compression.

HDFC Bank's loan growth is expected to track industry trends, supported by strong deposit accretion. In Q2, advances grew 9.9% year-on-year, while deposits rose more than 12%. Analysts, however, foresee some moderation in profitability this quarter.

The lender is deliberately growing loans slower than deposits to improve its credit deposit (CD) ratio, which was impacted by the merger with the erstwhile HDFC Ltd. The CD ratio improved from 96.5% in Q4 FY25 to 95.1% in Q1.

Macquarie Research said deposit growth at 12% year-on-year and 1.4% quarter-on-quarter was lower than expected. Deposit accretion in the quarter was ₹37,500 crore against ₹1.2 trillion a year ago.

"Accordingly, there was a 285 bps QoQ increase in LDR in Q2. Given the lower deposit mobilization (₹0.9 trillion in H1 FY25), there is downside risk to our deposit growth estimates of 15% yo-y for FY26," the brokerage said, factoring

NIMs are expected to stay under pressure.