HDFC Bank vs ICICI Bank vs Axis Bank: Which Banking Giant Emerges Winner in Q1?

The first-quarter earnings season is in full swing, and over the past week, the spotlight has stuck on the banking sector. Lending giants HDFC Bank, ICICI Bank and Axis Bank have all posted their April–June results and what’s emerging is a story of divergence.

While Axis Bank left both investors and brokerages underwhelmed with a lacklustre set of results, HDFC Bank delivered a fairly stable performance. ICICI Bank, meanwhile, stood out with a robust show. Three banks, three very different earnings journeys, each grappling with its own set of challenges and levers.

Axis Bank Disappoints in Q1

Axis Bank’s Q1 left little room for cheer. Net profit slipped 3.8% on year to ₹5,806 crore, while net interest income (NII) barely moved, up just 0.8% to ₹13,560 crore. Margins thinned to 3.80% from 4.05% last year. However, what spooked the Street most was a sharp jump in fresh slippages and a clear dip in asset quality. Gross NPA (Non-Performing Assets) rose to 1.57% from 1.28% in just one quarter. Net NPA moved up to 0.45% in Q1.

HDFC Bank Takes A Cautious Stand

HDFC Bank played it steady but guarded. Consolidated net profit dipped on year to ₹16,258 crore, despite a one-time ₹9,128 crore gain from the HDB Financial IPO. The bank parked ₹14,442 crore in provisions, with₹9,000 crore of it as floating buffers. A move that signals more concern than confidence. NII grew 5.4% to ₹31,438 crore, but margins narrowed to 3.35% from 3.46%. Meanwhile, the HDB IPO diluted the bank’s stake to 74.19% from 94.32%.

ICICI Bank’s Business As Usual

ICICI Bank stayed true to form, growth, clean numbers, and no drama. Net profit rose 15.5% YoY to ₹12,768 crore. NII grew 10.6% to ₹21,635 crore, margins held strong at 4.34%, and core operating profit jumped 13.6%. Corporate lending did the heavy lifting, with gross advances up 13.2%. Asset quality also got better as gross NPA dropped to 1.67%, net NPA eased to 0.41%.

What Does Brokerage Forecast Says?

While the earnings told three different stories, brokerage views seem to fall into two camps. HDFC Bank and ICICI Bank are still riding high in brokerages’ playbooks, with expectations of steady growth ahead. Meanwhile, Axis Bank finds itself sailing in turbulent waters, with brokerages dialing down their optimism after its underwhelming Q1 show.

In fact, HDFC and ICICI continue to feature as top banking picks for most brokerages, while Axis is now seeing rating cuts and a growing sense that the pressure isn’t easing anytime soon.

Nuvama Institutional Equities is one such brokerage that downgraded Axis Bank to a ‘hold’ on the back of weaker Q2 margin guidance and a big miss on asset quality. Looking ahead, Motilal Oswal, which already has a "neutral" rating on Axis, noted that the lender’s ongoing clean-up exercise, expected to wrap up by Q2 will likely keep slippages and credit costs elevated in the near term.

Meanwhile, the same brokerages have painted a far rosier picture for rivals HDFC Bank and ICICI Bank. Nuvama was impressed by ICICI’s better-than-expected Q1 margins and core earnings, adding that the strong performance could even trigger a re-rating for the stock.

It expressed similar optimism for industry bellwether HDFC Bank, expecting margin growth and earnings stability to pick up in the second half of the fiscal driven by a fortified provision buffer, which remains one of HDFC’s traditional strengths.

On similar lines, Motilal Oswal lauded ICICI Bank’s resilient showing in the June quarter. “Over the past few years, irrespective of the sectoral challenges, be it unsecured asset quality issues, systemic growth moderation, liability accretion or NIM headwinds, the bank has consistently delivered, beating Street expectations,” it said. Q1, it added, was just an extension of that consistency.

HDFC Bank also earned thumbs up for its provisioning strategy. “The gradual retirement of high-cost borrowings, along with an improvement in operating leverage and the provision buffer, will support return ratios over the coming years,” Motilal Oswal noted.

To sum it up, ICICI and HDFC are duelling at the top, drawing bullish nods across the board. Axis, on the other hand, is stuck in the slow lane, with neither earnings nor analysts rooting for a quick rebound.