Strong Q4 Shows for HDFC and ICICI Bank, But Who’s the Real Winner?

The banking pack has been rejoicing in trade today as two heavyweights—ICICI Bank and HDFC Bank kickstarted the Q4 earnings season for the sector with a cheer. Both the banking bellwethers delivered better-than-expected quarterly numbers, sparking a wave of buying across the counters, lifting both the stocks as well as the overall Nifty Bank index to their respective record highs.

While improving loan growth aided overall earnings for HDFC Bank, rival ICICI Bank surprised the Street with better-than-expected interest margins, prioritizing profitability over growth.

ICICI Bank vs HDFC Bank

What does the financials say?

Even though the two banking heavyweights impressed the Street with their results, a closer look at the numbers brings out a winner. Among key performance metrics, ICICI Bank fared better than HDFC Bank on most accounts.

When it comes to net interest margin (NIM), HDFC Bank reported a core NIM of 3.65% in Q4, slightly higher than the 3.63% recorded a year earlier. In comparison, ICICI Bank maintained a stronger NIM at 4.41% in Q4 FY25, up marginally from 4.4% in the same period last year.

For loan growth, HDFC Bank’s gross advances rose 5.4% year-on-year to Rs 26.4 lakh crore, however, ICICI Bank, outpaced its rival with a 13.3% year-on-year growth, coming in at Rs 13.41 lakh crore, driven largely by corporate lending.

As for asset quality, both lenders managed to improve their standing, as HDFC Bank’s net non-performing assets (NPAs) stood at 0.43% in Q4 FY25, compared to 0.33% a year earlier and ICICI Bank’s fell to 0.39% from 0.42% in the base period.

Rounding it all, HDFC Bank’s bottomline growth also lagged its nearest competitor ICICI Bank. While HDFC Bank delivered a near 7% on year growth in its standalone profit for Q4, ICICI Bank impressed the Street much more with its 18% surge.

What do analysts say?

Following the result announcements, it is safe to say that brokerages and analysts across the Street are rooting much more for ICICI Bank than they are for HDFC Bank. Impressed by ICICI Bank’s solid Q4 performance in the face of tough macro conditions, brokerage firm Motilal Oswal Financial Services went gaga over the lender. “Seldom does a bank of the size of ICICI Bank (ICICIBC) surprise with its operating performance the way this bank has done, that too amid a volatile macro environment, elevated competition for deposits, and ongoing normalization in asset quality,” the brokerage said.

Meanwhile, buoyed by the lender’s better-than-expected Q4 numbers, especially the beat on NIMs, MOFSL also raised its earnings estimates by 2.5% for FY26 and 4.2% for FY27. To that effect, MOFSL also picked up ICICI Bank over HDFC Bank as its top pick within the banking pack.

Other brokerages echoed similar sentiment. HDFC Securities also expects ICICI Bank to maintain its sector leadership, while Nuvama Institutional Equities believes the stock’s premium valuation relative to peers is likely to expand, reaffirming ICICI Bank as its top choice.

Another prominent name, Kotak Institutional Equities echoed a similar sentiment, as it chose ICICI Bank as the best-in class private lender. However, KIE held a slightly more cautious outlook for ICICI Bank as it feels such a sharp outperformance from the lender is unlikely to be repeated again. Instead, KIE sees ICICI Bank delivering stable returns in the future.

That said, the outlook for HDFC Bank is not entirely bleak. Analysts still expect the bank to deliver stronger growth ahead, though the pace and magnitude may not match that of ICICI Bank. MOFSL remains optimistic, projecting that a gradual retirement of high-cost borrowings and improved operating leverage will help boost HDFC Bank’s return ratios over time.

However, not all views are upbeat either. Taking a more bearish stance, KIE downgraded HDFC Bank, citing expectations of a challenging FY26 due to headwinds on both yields and loan growth. “FY26 is likely to be a difficult year for HDFC Bank, with risks around margins and credit growth. Given the stock’s recent sharp outperformance, there is limited room for disappointment,” the brokerage cautioned.

In conclusion, the verdict seems pretty clear. While HDFC Bank remains a bigger player in the industry, the Street is leaning towards ICICI Bank more, anticipating it to outperform the bellwether and emerge as the new leader.