India’s two largest private sector banks — HDFC Bank and ICICI Bank — grabbed headlines today as they released their financial results for the quarter ended June 2025.

Shares of both the companies surged 2%, pushing the Bank Nifty index to record levels.

Bank Nifty Hits Record High

While both lenders delivered strong numbers, the drivers of growth were notably different.

From HDFC Bank’s margin recovery and bonus share buzz to ICICI Bank’s steady asset quality and loan book expansion, the June quarter results offer a closer look at how each bank is navigating the current macro environment — and what it could mean for investors going forward.

Let’s take a detailed look to find out which is better: HDFC Bank or ICICI Bank?

HDFC Bank Q1 Result Analysis

Steady Quarter; Growth Set to Accelerate

HDFC Bank delivered a stable performance in the first quarter of FY26, with investor sentiment getting a boost from the bank’s announcement of its first-ever bonus issue and a special dividend. 

The stock price rose 2% in early trade today.

HDFC Bank Share Price

As India’s largest private sector bank by lending, HDFC Bank holds a ~15% market share in total credit. It is primarily a retail-focused lender, with nearly 50% of its loan book contributed by retail segments.

The bank is part of the larger HDFC Group, which also has significant presence in mutual funds, insurance, broking, and other financial services.

In Q1, the bank reported a healthy and steady performance, while also signaling optimism for the coming quarters—particularly on the loan growth front.

Net interest income (NII)—the income earned from lending—rose 5% year-on-year to ₹31,438 crore. This growth came despite a dip in net interest margin (NIM), which declined to 3.35% from 3.46% in the previous quarter. The softness in margins was largely expected due to recent interest rate cuts by the RBI.

HDFC Bank’s total loan book grew 7% quarter-on-quarter to ₹26.53 lakh crore.

Retail loans (including personal and home loans) saw a strong 8.1% growth. Meanwhile, SME loans grew by an impressive 17.1%. Corporate loan growth was modest at just 2%.

On the deposit side, growth remained strong. Deposits rose 16.4% YoY to ₹27.64 lakh crore. The bank’s management expects this momentum to continue and aims to increase its market share further.

Provisions rose sharply this quarter, primarily due to the creation of floating and contingent provisions. 

Using proceeds from its subsidiary HDB Financial Services’ IPO, the bank prudently created ₹9,000 crore in floating provisions—meant as a buffer for future uncertainties—and an additional ₹1,700 crore in contingent provisions. These steps further strengthen the bank’s balance sheet.

Overall, HDFC Bank’s net profit rose 12% YoY to ₹18,160 crore, surpassing market expectations.

In a major milestone, HDFC Bank announced a 1:1 bonus issue—its first ever. It also declared a special interim dividend of ₹5 per share.

Looking ahead, HDFC Bank expects loan growth in FY26 to be in line with the industry, but plans to outperform the system from FY27 onward. This growth will be led by the retail and SME segments, which offer better returns.

The bank also noted that its time deposits haven’t been fully repriced yet. As these start getting reset to lower interest rates, margins are expected to improve. A higher mix of retail and SME loans and replacing high-cost borrowings with deposits will further support margin and profitability expansion.

The bank aims to reach a return on assets (RoA) of 1.9–2% by FY27–28—indicating strong profitability potential.

Overall, HDFC Bank’s medium- to long-term outlook remains positive and well-structured.

Now, let’s look at ICICI’s numbers.

ICICI Bank Q1 Result Analysis

Resilient Performance Despite a Challenging Environment

ICICI Bank delivered a strong set of numbers for the April–June quarter, even as market conditions remained uncertain. 

The stock opened with a gap-up today and ended near its 52-week high.

ICICI Bank Share Price

As India’s second-largest private lender by outstanding loans, ICICI Bank is part of the diversified ICICI Group—a full-service financial powerhouse with presence across lending, insurance (life and general), asset management, broking, and more.

In Q1FY26, the bank posted a 15.5% year-on-year jump in net profit, which came in at ₹12,760 crore—beating analyst estimates. The growth was supported by strong margins, lower operating expenses, and healthy returns from its investment book. 

The bank also maintained solid control over asset quality.

Net interest income (NII) rose 11% YoY and 2% QoQ to ₹21,630 crore. While net interest margin (NIM) slipped slightly by 7 basis points to 4.34%, it remains at a healthy level.

Loan growth stayed robust, with total advances up 11.5% YoY and 1.7% sequentially—led primarily by strong momentum in the business banking segment. 

On the liabilities side, deposits grew 12.8% YoY and remained flat QoQ. The CASA ratio stood at a stable 41.2%.

Fresh slippages stood at ₹6,250 crore, marginally higher than the ₹5,920 crore in the previous quarter. However, gross NPAs remained flat at 1.67%, while net NPAs rose slightly by 2 basis points to 0.41%—indicating continued strength in asset quality.

ICICI Bank’s treasury income and lending growth helped offset mild pressure on margins this quarter. The business banking segment remained a key contributor to loan growth, and deposits showed resilience.

While margins may face some pressure in the near term due to the RBI’s recent rate cuts, the bank expects improvement from Q3 onwards as volatility reduces and the high-yield loan book expands. The bank also continues to focus on high-quality lending and disciplined credit practices.

On the operational side, sustained investments in technology are enhancing productivity and cost efficiency. With a strong provisioning buffer in place and a tight grip on asset quality, the bank remains well-positioned for steady growth.

Overall, ICICI Bank has delivered yet another solid quarter—demonstrating resilience, consistency, and focus in an uncertain macro environment.

HDFC Bank vs ICICI Bank: Which is Better?

Both the banks have posted upbeat earnings in a challenging environment. While HDFC Bank is better placed, ICICI Bank’s management expects growth to pick up from the third quarter of this fiscal.

Despite rapid progress, a large part of India still remains credit-averse. For many, taking a loan is seen as a last resort — not a financial tool. This mindset has kept India’s credit penetration well below global levels.

But that’s exactly where the opportunity lies for ICICI Bank and HDFC Bank.

As the economy matures, this gap offers significant headroom for Indian banks to grow.

Take manufacturing, for example. With the global “China plus one” shift gaining momentum, India is emerging as a serious alternative. The government’s push to turn India into a global manufacturing hub is only accelerating this trend.

And at the heart of this transformation? Small and medium enterprises (SMEs). Financing these businesses could unlock a major new growth engine for banks.

Another structural shift is underway in rural India. As manufacturing expands, millions currently employed in agriculture could transition to industrial jobs — creating new demand for credit and banking services in semi-urban and rural areas.

Of course, challenges remain. Digital and financial literacy in these regions is still low. For banks, this is both a hurdle and an opportunity. Cracking the rural code will require innovation and education — but the payoff could be massive.

That said, growth without caution is risky. Banks that maintain strong underwriting standards and manage credit risk effectively will stand out.

To sum up, as credit penetration deepens and the economy shifts gears, fundamentally strong banks like HDFC Bank and ICICI Bank are well-positioned to ride this wave of transformation — and create long-term value in the process.

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