Oct 18, 2026 · 20 min · 7 segments
A stark divergence in earnings between banking giants HDFC and Axis Bank is reshaping investor expectations in the private sector. We analyze the latest momentum for #HDFCBank, #AxisBank, #ICICIBank…
Leading our coverage this morning is bank earnings and valuation.
It presents a peculiar paradox for investors in the Indian banking sector where two giants share identical valuation metrics yet deliver vastly different financial outcomes during the September quarter of 2026.
However, their operational engines are running on entirely different fuel.
Despite high-margin small enterprise loans rising 23.5%, the largest, private-sector bank saw standalone net profit climb only 4.7% to 19,510 crore rupees.
This subdued growth stems from higher tax expenses and provisions that constrained the bottom line, even as asset quality remained stable with net non-performing assets at 0.37%.
The net interest margin compressed slightly to 3.3%, reflecting pressure in the funding environment.
Its loan book grew by 23% to Rs 13,73,000 crore.
Standalone net profit surged 37.6% to reach Rs 7,003 crore.
This divergence was driven largely by a dramatic fall in provisions, which dropped from Rs 3,547 crore to just Rs 1,693 crore compared to the prior year.
Asset quality improved further with net non-performing assets falling to 0.35%.
Both institutions leveraged overseas deposits under the FCNR window to fuel this expansion, raising billions of dollars to lend domestically despite headwinds from rising government bond yields crossing 7%.
ICCI Bank also reported robust earnings with profit jumping 20.1% to Rs 14,843 crore.
Loan book growth reached 30% year-on-year.
Yet, margins came under pressure as the net interest margin contracted to 4.18%.
Executives attributed this decline to the cost of foreign currency, non-repatriable deposits which expanded the base but lowered the cash deposit ratio.
Capital buffers remained strong with an overall adequacy ratio standing at 16.68%.
Elsewhere in the sector, Yes Bank announced a 65% jump in net profit to Rs 1,080 crore.
However, a shadow looms over these headline figures regarding additional Tier 1 bonds.
A recent Supreme Court judgment means the bank could face a loss of over Rs 5,200 crore if the reinstatement impact is recognized immediately.
Management noted they are evaluating legal remedies while noting capital adequacy would remain unchanged pending final accounting treatment.
Looking ahead, market analysts suggest both HDFC and Axis remain undervalued relative to historical averages given their current trading prices.
The appointment of Anup Bagchi as chief executive for HDFC Bank in October 2026 brings fresh leadership just as a recent quarter percentage point reserve bank interest rate hike is expected to support margin recovery significantly.
Leading our coverage this morning is bank earnings and valuation.
It presents a peculiar paradox for investors in the Indian banking sector where two giants share identical valuation metrics yet deliver vastly different financial outcomes during the September quarter of 2026.
However, their operational engines are running on entirely different fuel.
Despite high-margin small enterprise loans rising 23.5%, the largest, private-sector bank saw standalone net profit climb only 4.7% to 19,510 crore rupees.
This subdued growth stems from higher tax expenses and provisions that constrained the bottom line, even as asset quality remained stable with net non-performing assets at 0.37%.
The net interest margin compressed slightly to 3.3%, reflecting pressure in the funding environment.
Its loan book grew by 23% to Rs 13,73,000 crore.
Standalone net profit surged 37.6% to reach Rs 7,003 crore.
This divergence was driven largely by a dramatic fall in provisions, which dropped from Rs 3,547 crore to just Rs 1,693 crore compared to the prior year.
Asset quality improved further with net non-performing assets falling to 0.35%.
Both institutions leveraged overseas deposits under the FCNR window to fuel this expansion, raising billions of dollars to lend domestically despite headwinds from rising government bond yields crossing 7%.
ICCI Bank also reported robust earnings with profit jumping 20.1% to Rs 14,843 crore.
Loan book growth reached 30% year-on-year.
Yet, margins came under pressure as the net interest margin contracted to 4.18%.
Executives attributed this decline to the cost of foreign currency, non-repatriable deposits which expanded the base but lowered the cash deposit ratio.
Capital buffers remained strong with an overall adequacy ratio standing at 16.68%.
Elsewhere in the sector, Yes Bank announced a 65% jump in net profit to Rs 1,080 crore.
However, a shadow looms over these headline figures regarding additional Tier 1 bonds.
A recent Supreme Court judgment means the bank could face a loss of over Rs 5,200 crore if the reinstatement impact is recognized immediately.
Management noted they are evaluating legal remedies while noting capital adequacy would remain unchanged pending final accounting treatment.
Looking ahead, market analysts suggest both HDFC and Axis remain undervalued relative to historical averages given their current trading prices.
The appointment of Anup Bagchi as chief executive for HDFC Bank in October 2026 brings fresh leadership just as a recent quarter percentage point reserve bank interest rate hike is expected to support margin recovery significantly.
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