HDFC Bank, ICICI Bank Surge 2% on Strong Q1FY26 Results

On Monday, the HDFC Bank share price rose by 2.2 percent and ICICI Bank rose by 2.4 percent on NSE after the top two Indian private sector banks announced their Q1FY26 financial results, driving the Nifty Bank index to a day's high of 56,761.5, an increase of 0.85 percent. These results have provided a boost to the investor sentiment, reaffirming the strength and resilience of the country's financial system.

HDFC Bank

HDFC Bank delivered a steady financial performance in Q1FY26, underscoring consistent growth despite challenging macroeconomic conditions. The bank reported a standalone net profit of Rs 18,155 crore, marking a robust 12.2 percent year-on-year rise. Net interest income (NII) reached Rs 31,438 crore, representing a 5.4 percent growth from the previous year. Total income climbed to around Rs 99,200 crore as non-interest income components saw a substantial increase, contributing significantly to the bottom line.

The bank managed its expenses efficiently, as operating expenses increased by only 4.9 percent year-on-year, bringing the cost-to-income ratio to 39.6 percent (excluding staff ex-gratia provision). Notable strength appeared in asset quality, with gross non-performing assets (GNPA) at 1.40 percent and ex-agriculture GNPA at 1.14 percent. HDFC Bank maintained a net interest margin (NIM) of 3.35% for the quarter, reflecting a minor dip due to higher funding costs, but still within a comfortable range for sustainable profitability. Other important performance ratios included a return on assets (RoA) at 1.93 percent and a return on equity (RoE) at 14.7 percent. The capital adequacy position remained rock solid at 19.9 percent, with a Common Equity Tier 1 (CET1) ratio of 17.4 percent. The bank created fresh provisions, which saw an increase of 455 percent YoY.

During this period, HDFC Bank saw average deposits rise by 16.4 percent year-on-year and average advances under management grow by 8.3 percent, signifying decent growth in core banking activities. HDFC Bank CFO Srinivasan Vaidyanathan, commenting on Q1FY26 results, stated, "Slippages are stable and provisions have been strengthened for resilience." The bank underscored its commitment to shareholders by declaring its first-ever 1:1 bonus share issue and a special interim dividend of Rs. 5.

ICICI Bank

ICICI Bank continued its trajectory of strong growth by posting a standalone net profit of Rs 12,768 crore for Q1FY26, reflecting a 15.5 percent increase from the previous year. Net interest income for the quarter reached Rs 21,635 crore, up 10.6 percent year-on-year, due to persistent expansion in the retail and business banking segments.

The bank’s NIM stood at 4.34 percent, remaining stable for year-on-year and a slight drop of 70 basis points quarter on quarter. In terms of asset quality, ICICI Bank reported a further improvement, with gross NPA at 1.67 percent and net NPA at just 0.41 percent. Business banking portfolios registered a remarkable growth of 29.7 percent year-on-year. Total advances rose to Rs 13,64,157 crore, a substantial 11.5 percent annual increase, while deposits grew by 12.8 percent year-on-year. The current account and savings account deposits stood at 41.2 percent and increased by 13.6 percent YoY, respectively, underlining the bank’s appeal to individual and corporate customers alike. ICICI Bank’s capital adequacy ratio stood at 16.97 percent, with the CET1 ratio at 16.31 percent. The provisions saw a 36.2 percent increase YoY.

The executive director, Sandeep Batra said “In comparison to the current quarter (Q1FY26), the impact of transmission of repo rate cuts on external benchmarks linked to loans is expected to be higher in the next quarter, and I think that's just a function of the cycle,” and added “Of course, it will be partially set off by savings rate reduction and gradual repricing of term deposits.” The board further pointed out the acquisition of the entire stake in ICICI Prudential Pension Funds Management, which broadens the bank’s presence in the financial services ecosystem.

In summary, both HDFC Bank and ICICI Bank have reported healthy standalone financials for Q1FY26, along with decent growth, strong asset quality, and robust capital positions. Out of many banks posting an increase in asset quality concerns, these 2 banks have showcased their resilience in the challenging environment.