India’s leading private sector lenders, HDFC Bank and ICICI Bank, delivered steady and resilient performances in Q4 FY26, reinforcing confidence in the banking sector despite margin pressures and evolving funding dynamics.

Key Highlights

• HDFC Bank and ICICI Bank post strong profit growth while margins remain stable amid rising costs.
• Loan growth stays robust and asset quality improves, signalling steady outlook for India’s private banking sector.

Both banks reported robust profit growth, stable asset quality, and sustained credit demand, even as net interest margins (NIMs) remained within a narrow range- signaling a phase of consolidation rather than expansion.

Margins Stabilize Amid Cost Pressures

A key takeaway from the March quarter results is the stability in margins despite rising deposit costs.

• HDFC Bank reported a NIM of 3.38%, reflecting ongoing balance sheet adjustments following its merger.
• ICICI Bank maintained a stronger NIM of 4.32%, unchanged year-on-year, indicating better margin resilience.

Industry commentary suggests that margins are now range-bound, with funding costs and deposit repricing playing a decisive role in near-term performance.

Profitability Remains Strong

Both lenders posted healthy earnings growth, underpinned by steady net interest income and controlled credit costs:

• HDFC Bank saw moderate NII growth of 3.2% YoY, supported by stable lending activity.
• ICICI Bank outperformed with 8.4% YoY NII growth, reflecting stronger operational momentum.

Recent reports also highlight that both banks delivered solid profit growth in Q4, reinforcing their earnings strength.

Credit Growth Continues to Drive Momentum

Loan growth remained a key pillar for both banks:

• HDFC Bank expanded advances significantly, maintaining its leadership in scale.
• ICICI Bank recorded strong growth across domestic lending segments.

Management commentary indicates that both banks are focusing on calibrated, risk-adjusted expansion, aligned with broader system growth expectations.

Also Read: India Banking Sector Hits 2-Year High in Credit and Deposit Growth

Deposits and Funding Mix in Focus

Deposit growth continues to shape profitability dynamics:

• HDFC Bank strengthened its deposit base, with a continued focus on retail deposits and granular funding.
• ICICI Bank also reported steady deposit growth, supported by improving economic activity and policy stability.

The evolving funding mix - particularly the shift toward higher-cost term deposits - remains a key factor influencing margins going forward.

Asset Quality Improves Further

Both banks reported improving asset quality, reinforcing sector stability:

• HDFC Bank reduced its gross NPA ratio to 1.15%, with strong provisioning buffers.
• ICICI Bank reported a lower net NPA ratio of 0.33%, alongside robust provisioning coverage.

Analysts note that declining additions to bad loans and prudent provisioning have helped contain credit risks across portfolios.

Dividend Payouts Reflect Confidence

Both lenders rewarded shareholders with steady dividends:

• HDFC Bank announced a total payout of Rs 15.50 per share for FY26.
• ICICI Bank declared a Rs 12 per share dividend, supported by consistent earnings growth. 

The Q4 FY26 results indicate that India’s top private lenders are entering a phase of stable, sustainable growth rather than aggressive expansion. With strong balance sheets, disciplined risk management, and continued digital adoption, both banks are well-positioned to deliver consistent returns in a moderating interest rate environment.