ICICI Bank delivered faster profit, loan and deposit growth than HDFC Bank in the quarter ended September 30, 2026, while both Indian lenders reported narrower interest margins. The second-quarter fiscal 2027 results leave investors weighing ICICI’s stronger operating growth against HDFC’s prospects for a recovery in margins and funding costs.
Key Takeaways
- ICICI’s quarterly profit rose 20.1%, compared with approximately 5% growth at HDFC.
- Foreign-currency deposits boosted ICICI’s lending, although growth remained stronger after excluding related loans.
- Both banks face margin pressure; HDFC’s recovery outlook remains an expectation rather than a reported improvement.
Table of Contents
- ICICI Bank widens the operating growth gap
- Deposit inflows bring a margin trade-off
- HDFC’s recovery case depends on cheaper funding
- Credit quality presents a mixed comparison
- Conclusion
ICICI Bank widens the operating growth gap
ICICI’s standalone profit after tax reached ₹14,843 crore, up from ₹12,359 crore a year earlier. HDFC’s quarterly profit rose approximately 5% to about ₹19,500 crore. HDFC remained the larger earner, but ICICI posted the faster increase.
ICICI’s September-quarter performance review showed total loans rising 30.0% year over year and period-end deposits increasing 27.1%. HDFC’s loan growth was 16.4%, while deposits increased 18.8%.
The headline lending figures were boosted by foreign currency non-resident bank deposits, known as FCNR(B) deposits. Excluding loans made by international branches against those deposits, ICICI’s loan growth was 24.1%. HDFC’s growth excluding FCNR(B)-related lending was 14.4%, leaving a substantial gap even after the adjustment.
| Item | Details |
|---|---|
| Gross nonperforming asset ratio | HDFC: 1.11%; ICICI: 1.20% at September 30, 2026. |
| Net nonperforming asset ratio | HDFC: 0.37%; ICICI: 0.30% at September 30, 2026. |
| Quarterly credit cost | HDFC: 0.46%; ICICI: 0.20%. |
| HDFC contingent provisions | Approximately ₹49,500 crore, or roughly 1.5% of loans. |
Deposit inflows bring a margin trade-off
ICICI mobilized around $18 billion in FCNR(B) deposits and deployed a substantial portion into lending, including overseas loans. Those assets expanded the balance sheet but earned lower margins than domestic lending.
ICICI’s net interest margin declined to 4.18% from 4.36% in the preceding quarter. The earlier quarter also included an eight-basis-point benefit from interest on a tax refund, so the full reported decline should not be attributed to the change in lending mix.
Management expects further margin moderation in the third quarter of fiscal 2027 before recovery from the fourth quarter. That is guidance, not an improvement already achieved.
HDFC’s reported net interest margin on assets was 3.16%, down 10 basis points sequentially. Its funding pressures included FCNR(B) flows, funding costs and a lower share of current and savings account deposits.
HDFC’s recovery case depends on cheaper funding
Anand Rathi said HDFC had struggled to narrow its post-merger operating gap with ICICI. With current and savings account deposit growth trailing lending growth, the brokerage expects the funding-cost disadvantage to take longer to resolve.
The brokerage nevertheless believes HDFC’s margins may have bottomed. Analysts expect support from the deployment of FCNR(B) deposits and the run-off of high-cost borrowings. Those potential benefits still need to appear in subsequent results.
The share-price backdrop is sharply different. As of the October 19, 2026 snapshot, ICICI shares had returned 3.5% for the year, while HDFC shares had fallen 28%. The correction prompted JM Financial to upgrade HDFC to buy from add, but the rating remains a brokerage assessment rather than evidence that the operating recovery is complete.
Credit quality presents a mixed comparison
Neither lender held an advantage across every credit-quality measure. HDFC had the lower gross nonperforming asset ratio, while ICICI had the lower net ratio and credit cost.
ICICI’s credit cost benefited from lower slippages and a large corporate recovery. HDFC’s credit cost increased slightly, although gross and net slippages declined sequentially. HDFC also held a substantial contingent provision buffer.
Conclusion
The September-quarter results show ICICI growing faster, while HDFC’s recovery case still depends on better funding economics. The next reporting period will test ICICI management’s expectation of further margin moderation and whether HDFC begins to deliver the improvement anticipated by analysts.
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