Early Q2 results from HDFC Bank, ICICI Bank and Axis Bank have kept analysts positive about their growth outlook for the rest of FY27, despite pressure on margins. Brokerages have retained their ‘Buy’ ratings on all three lenders, with ICICI Bank emerging as the strongest performer on core income growth and profitability.
So far this year, shares of ICICI Bank and Axis Bank have gained up to 4 percent, while HDFC Bank has declined 26 percent. ICICI Bank has 53 ‘Buy’ ratings from brokerages, followed by Axis Bank with 49 and HDFC Bank with 47.
Among the three lenders, ICICI Bank reported the strongest growth in net interest income (NII), which rose 17.7 percent year-on-year in Q2. Axis Bank’s NII grew 11.8 percent, while HDFC Bank recorded 10 percent growth.
However, Axis Bank reported the sharpest rise in net profit at 37.6 percent year-on-year, followed by ICICI Bank at 20.1 percent. HDFC Bank’s profit grew just 4.7 percent, partly due to lower treasury gains. Axis Bank’s profit growth also benefited from a lower base, as the bank had made a one-time provision related to priority sector lending in the year-ago quarter.
All three lenders reported lower net interest margins (NIMs), partly due to foreign currency deposits raised under the RBI’s FCNR(B) swap window. Axis Bank saw the sharpest year-on-year decline of 37 basis points. The bank said FCNR deposits alone reduced its margin by 11 basis points; excluding this impact, its NIM would have been 3.47 percent.