HDFC Bank, ICICI Bank Q4: Profits rise, FY27 cues

What the latest results signalled for private banks

India’s top two private sector lenders, HDFC Bank and ICICI Bank, reported robust quarterly earnings on Saturday, April 18. The results reinforced a key theme in the current market: profits are growing, net interest margins (NIM) are broadly stable, and asset quality has continued to improve. Analysts stayed constructive on both lenders and, by extension, on the broader banking sector. The commentary also came at a time when equities have been volatile in the wake of the US-Israel war on Iran. In that backdrop, banking has been one of the sectors that analysts have continued to view positively.

HDFC Bank: March-quarter profit and NII growth

HDFC Bank reported a 9% year-on-year increase in net profit for the January to March quarter. Net profit came in at ₹19,221 crore. Net interest income (NII) rose 3.2% year-on-year to ₹33,082 crore. The broader framing from market participants was that the quarter underlined stable core performance while the sector’s asset quality cycle remains supportive.

ICICI Bank: March-quarter profit, NII and the focus on provisions

ICICI Bank reported a standalone net profit of close to ₹13,702 crore, up 8.5% year-on-year for the same quarter. Net interest income rose 8.4% year-on-year to ₹22,979 crore. While the earnings were important, a key highlight in broker commentary was the further improvement in asset quality and a sharp dip in provisions at ICICI Bank. JM Financial Institutional Securities said ICICI Bank’s asset quality remained “best-in-class,” pointing to a quarter-on-quarter decline of 37 basis points in annualised gross slippages and a 24 bps fall in credit cost to 3 bps, alongside higher recoveries from written-off accounts.

Why asset quality stayed central to the bull case

The common thread across analyst notes was that asset quality concerns have ebbed in recent quarters. This has mattered because a benign credit cost environment can allow earnings to compound even if loan growth moderates. Analysts also flagged that the impact of the conflict on certain sectors and small and medium industries will need monitoring in the next quarter. For investors, this is an important qualifier: the near-term operating numbers may be strong, but pockets of stress can still emerge depending on how macro conditions evolve.

Valuations, deposits and the credit growth watchlist

Brokerages also pointed to reasonable valuations in banking amid wider market volatility. Growth in both deposits and advances has been described as good, supporting sector confidence on funding and balance-sheet expansion. At the same time, the commentary included a clear watchpoint: credit growth could see some slowdown if the war lingers on for several months. This matters because the sector’s earnings trajectory depends on both growth and spreads, and any sustained macro shock can change credit demand and repayment behaviour.

FY27 margin recovery narrative: what Motilal Oswal highlighted

A separate sector view from Motilal Oswal Financial Services argued that ICICI Bank, HDFC Bank and State Bank of India could be among the leaders in margin recovery in FY27 as loan yields rise. The report said yields on fresh loans rose sharply in January 2026, supporting the margin recovery setup for FY27. It also noted that outstanding loan yields were largely stable, suggesting most of the repo-linked repricing is behind banks after the December 2025 rate cut.

On the funding side, Motilal Oswal pointed to easing term deposit rates. The weighted average term deposit rate for the banking system fell 4 basis points month-on-month in January to 6.74%. The spread of term deposit rates over the repo rate was described as near a four-year high of about 1.5% for both public and private banks, indicating scope for further moderation in cost of funds through the first half of FY27.

Credit growth and earnings outlook: numbers to track

Motilal Oswal said systemic credit expansion recovered to 13.7% year-on-year and has stayed above 13% in recent fortnights. It expects momentum to sustain, supported by steady retail demand, a revival in unsecured lending, improving SME and corporate credit offtake, and a pickup in consumption trends. The brokerage also said it estimates profit after tax growth of 15.1% in FY27 and 17.8% in FY28.

Divergent quarters across FY26: what earlier prints showed

While the April 18 results were the immediate trigger, earlier quarters in FY26 showed that the two banks can deliver different growth paths even when fundamentals look steady. For the July to September quarter, HDFC Bank reported a consolidated net profit of ₹19,611 crore, while standalone profit was ₹18,641 crore, an 11% year-on-year increase. In the same period, ICICI Bank’s net interest income grew 7.4% year-on-year to ₹21,529 crore, and it reported a net interest margin of 4.30%, slightly down from 4.36% a year earlier.

Key quarterly datapoints (as reported)

Regulatory provisions and treasury swings: a recent comparison

A separate quarterly comparison highlighted how provisions and treasury outcomes can change reported profits even when core trends are steady. Both banks faced regulatory provisions for agricultural lending misclassification in that period, with ICICI setting aside ₹1,300 crore versus HDFC’s ₹500 crore. The same comparison also cited wage provisions of ₹800 crore for HDFC Bank and ₹150 crore for ICICI Bank, while treasury performance diverged with HDFC reporting ₹900 crore gains and ICICI reporting ₹160 crore losses.

What analysts said about preferences and monitorables

Analyst positioning in the coverage remained broadly constructive. JM Financial’s view on ICICI Bank emphasised sector-leading loan growth, better NIM management and strong asset quality trends, and said the bank could continue to command a premium valuation among large banks. For HDFC Bank, Rohan Mandora of Equirus Securities said the bank remained a preferred play amid macro uncertainty, citing comfortable valuations, the ability to navigate NPA cycles, and gradual easing of boardroom overhang with no recent adverse news flow. Axis Securities’ Dnyaanada Vaidya said the bank was positioned to sustain growth momentum while maintaining a calibrated approach focused on risk-reward, and flagged that clarity on MD and CEO succession remains a key monitorable.

Market impact: what matters for investors now

The immediate market relevance of the updates is the combination of improving asset quality and an emerging margin recovery setup, alongside a clear macro risk watchlist. The April 18 prints kept the focus on earnings resilience in large private banks, while the Motilal Oswal note framed FY27 as a period where easing deposit cost pressures and firming fresh loan yields could support margins. At the same time, the conflict-linked uncertainty was explicitly flagged as a variable that could affect certain sectors and SMEs, making next-quarter asset quality commentary and credit growth trends important datapoints.

Conclusion

HDFC Bank and ICICI Bank reported higher profits in the latest quarter, with stable NIM expectations and improved asset quality supporting analyst confidence. The near-term monitorables remain credit growth durability, provision trends, and any sector-specific stress linked to the geopolitical backdrop, alongside FY27 margin recovery signals as deposit costs reprice.