HDFCBANK

Outpaces

ICICIBANK

, But Lead Narrower Beyond One-Off Gains

The long-standing debate between

and has resurfaced after Q3FY26 earnings. This time, HDFC Bank leads with a 12% YoY PAT growth to ₹18,654 crore, while ICICI Bank reported a 4% PAT decline to ₹11,318 crore. However, excluding one-off factors, the gap is less pronounced. Both banks faced regulatory provisions on misclassified agricultural loans, but ICICI’s higher provisioning and treasury losses weighed more heavily on its bottom line. 1. Profitability and Provisions - HDFC Bank: PAT up 12% YoY, aided by ₹900 crore trading gains offsetting ₹800 crore wage provisions. - ICICI Bank: PAT down 4% YoY, hit by ₹1,300 crore provisions, ₹160 crore treasury losses, and ₹150 crore wage provisions. - Both banks clarified provisions were regulatory, not asset quality deterioration. 2. Asset Quality and Credit Costs - Ex-agriculture loans, both banks saw declining bad assets. - HDFC: Credit costs fell 9 bps QoQ to 41 bps. - ICICI: Seasonal farm slippages raised credit costs by 8 bps. 3. Core Business Metrics - HDFC: NIM rose 8 bps QoQ to 3.35%, NII up 6% YoY, fee income up 12% YoY. - ICICI: NIM flat at 4.3%, NII up 8% YoY, fee income up 6% YoY. - HDFC’s PPOP growth at 8% outpaced ICICI’s 6%. 4. Industry Outlook - Sector credit growth expected at 12–13% CAGR by FY27, aided by liquidity and easing stress. - Margins to benefit from deposit repricing and lower borrowing costs. - HDFC aims to outperform industry by 1–3%, driven by wholesale credit recovery. 5. Valuation and Investor View - HDFC’s CDR spiked to 98.5% in Jan, stock fell 5%, but management expects ratio to normalize to low 90s by FY27. - Nuvama Equities: ‘Buy’ on both; ICICI TP cut to ₹1,670 (2.8x FY27 BV), HDFC TP unchanged at ₹1,170 (2.7x FY27 BV). - HDFC currently enjoys stronger momentum, though ICICI’s leadership stability under Sandeep Bakshi remains a positive.