Mumbai: India’s two largest private sector lenders, ICICI Bank and HDFC Bank, have reported their financial results for the first quarter of FY27, offering investors a fresh look at the performance of the country’s banking giants. While both banks remained profitable and reported growth in their core lending businesses, ICICI Bank delivered stronger numbers across several key financial parameters, including net profit growth, net interest income, asset quality and operating profit.

HDFC Bank, meanwhile, posted steady profit growth but faced pressure on margins and operating profit, while its asset quality weakened slightly compared to the previous quarter. A comparison of the June quarter results suggests ICICI Bank had a stronger start to the financial year.

ICICI Bank reports stronger profit growth

ICICI Bank posted a standalone net profit of Rs 14,804 crore for the June quarter, registering a 16 per cent year-on-year increase from Rs 12,768 crore reported in the corresponding quarter last year.

The lender also comfortably exceeded analysts’ expectations, with Bloomberg consensus estimates pegging quarterly profit at Rs 13,373 crore.

HDFC Bank, on the other hand, reported a net profit of Rs 19,059 crore, up 5 per cent from Rs 18,155 crore a year earlier. Although HDFC Bank continued to report a higher absolute profit due to its larger size, its earnings growth was considerably slower than that of ICICI Bank.

The results were broadly in line with market expectations, with analysts estimating a quarterly profit of around Rs 19,720 crore.

ICICI records faster growth in net interest income

Net Interest Income (NII), one of the most closely watched indicators of a bank’s lending performance, also favoured ICICI Bank.

The bank’s NII increased 13 per cent year-on-year to Rs 24,385 crore, compared to Rs 21,635 crore in the corresponding quarter of the previous financial year.

HDFC Bank reported a more modest 6.7 per cent increase in NII, with the figure rising to Rs 33,534 crore from Rs 31,438 crore.

Although HDFC Bank generated a higher overall NII because of its significantly larger loan book, ICICI Bank’s stronger growth rate highlighted its continued momentum in lending and income generation.

Asset quality improves at ICICI, weakens slightly at HDFC

Asset quality remained another area where ICICI Bank outperformed its larger rival.

ICICI Bank’s Gross Non-Performing Asset (GNPA) ratio improved to 1.38 per cent, compared with 1.67 per cent in the year-ago quarter. The figure also came in better than analysts’ estimates of 1.45 per cent.

Its Net NPA ratio declined to 0.35 per cent, down from 0.41 per cent a year earlier, once again beating market expectations of 0.37 per cent.

HDFC Bank reported a slight deterioration in asset quality on a sequential basis.

The bank’s Gross NPA ratio increased to 1.17 per cent from 1.15 per cent in the previous quarter, while Net NPAs rose to 0.41 per cent from 0.38 per cent.

Although HDFC Bank continues to maintain one of the strongest asset quality profiles in the banking sector, the marginal increase in stressed assets stood in contrast to ICICI Bank’s continued improvement.

Operating profit highlights contrasting trends

The difference between the two banks became even more evident when comparing operating profit.

ICICI Bank reported an operating profit of Rs 20,386 crore, representing a significant increase from Rs 17,505 crore in the same quarter last year. The result also exceeded analysts’ expectations of Rs 19,278 crore.

HDFC Bank’s operating profit, however, declined sharply by 21.2 per cent year-on-year to Rs 28,168 crore, compared with Rs 35,734 crore in the corresponding period last year.

The decline reflected pressure on operating performance despite the bank continuing to report healthy profitability overall.

HDFC Bank faces margin pressure

HDFC Bank’s Net Interest Margin (NIM) on total assets stood at 3.26 per cent, marginally below analysts’ expectations of 3.32 per cent.

Its NIM on interest-earning assets came in at 3.40 per cent, indicating continued pressure on lending margins amid changing interest rate dynamics and funding costs.

Net interest margin remains a critical indicator of a bank’s profitability, measuring the difference between interest earned on loans and interest paid on deposits relative to assets.

While ICICI Bank’s detailed NIM figures were not highlighted in the comparison, its stronger growth in net interest income suggests it continued to maintain healthy lending profitability during the quarter.

ICICI Bank gains early edge in FY27

The first-quarter earnings indicate that both ICICI Bank and HDFC Bank remain financially strong institutions with healthy profitability and robust balance sheets. However, ICICI Bank delivered stronger operational performance across most key financial indicators.

The bank reported faster growth in net profit and net interest income, continued improvement in asset quality and a notable rise in operating profit, while also outperforming analysts’ expectations on multiple parameters.

HDFC Bank, despite maintaining higher absolute profits and net interest income because of its larger scale, experienced slower earnings growth, pressure on operating profit and a slight increase in non-performing assets.

As India’s banking sector continues to benefit from healthy credit demand and stable economic conditions, investors will closely monitor whether ICICI Bank can sustain its current momentum and whether HDFC Bank can improve profitability and margins in the coming quarters.