Q1 Earnings Face-Off: ICICI Bank Outshines HDFC as Provisions Drag Profit

Two of India’s private banking titans, ICICI Bank and HDFC Bank, released their Q1FY26 scorecards over the weekend, setting the stage for a battle of favourites on Monday on Dalal Street. While both lenders posted a rise in total income, only one of them managed to convert that growth into profits. And this quarter, the scales tipped firmly in favour of ICICI Bank.

Winner Takes Away Profits

ICICI Bank clocked a 15% year-on-year rise in net profit to ₹12,768 crore, comfortably outpacing Street expectations amidst solid momentum across its core lending and fee-based businesses.

HDFC Bank, by contrast, reported a marginal decline in consolidated net profit to ₹16,258 crore from ₹16,475 crore a year ago despite booking a hefty ₹9,128 crore one-off gain from the IPO of its subsidiary HDB Financial Services. The bank’s results were weighed down by elevated provisions of ₹14,442 crore, including ₹9,000 crore in floating provisions, suggesting a cautious stance amid macroeconomic uncertainties.

Managing Profitability

ICICI Bank continued to impress on the profitability front. Net interest income (NII) rose 8.4% on year to ₹21,634 crore, aided by stable margins and selective, high-yield lending. Gross advances jumped 13.2% on year to ₹13.64 lakh crore, with corporate lending doing the heavy lifting.

HDFC Bank reported a 5.4% increase in NII to ₹31,438 crore. However, its core net interest margin slipped to 3.35%, down from 3.46% in the previous quarter, reflecting the pressure of rising deposit costs. Its gross advances grew a modest 6.7% to ₹26.53 lakh crore, a far cry from ICICI’s double-digit loan book expansion.

Asset Quality: Stable, But With A Twist

On paper, both lenders held their ground. ICICI Bank’s gross NPA ratio improved to 1.67%, and net NPA stood at 0.41%, down from 0.43% YoY. HDFC Bank’s gross and net NPA stood at 1.40% and 0.47% respectively, only marginally higher than the year-ago quarter.

However, the provisioning strategy diverged significantly. ICICI stuck with a measured approach, with its provisioning coverage ratio at 75.3% and additional non-specific buffers worth ₹22,664 crore. HDFC, on the other hand, took the defensive route stockpiling contingent and floating provisions, which ended up dragging the quarter’s profitability.

The Verdict

HDFC Bank is still the bigger bank, by size, reach, and legacy. But being an elephant does mean that dancing would get difficult. And that’s just what rolled out in Q1 FY26, yet again. ICICI Bank emerged as the leaner, prudent and more meticulous lender, managing provisions as well as profitability well. It not only defended its margins and asset quality but also expanded its loan book at twice the pace of its closest rival.