Profitability & Margins

HDFC Bank reported a PAT of ₹186 billion, up 10.8% YoY, with RoA at 1.93% and RoE at 14.4%. Net interest income rose 4.8% YoY to ₹315.5 billion, and NIM stabilized at 3.27%, signaling margin resilience despite elevated deposit costs. Kotak Mahindra Bank, facing margin pressures, reported a consolidated PAT of ₹4,468 crore, down 11% YoY, and NIM compressed to 4.54% from 4.91% YoY. ICICI Bank posted a PAT of ₹12,359 crore (+5.2% YoY) with a stable NIM of 4.30%, while Axis Bank’s NII grew 2% YoY to ₹13,745 crore, with NIM at 3.73%. Across banks, cost discipline and operational efficiency helped offset partial margin pressures, with HDFC Bank showing a cost-to-income ratio improvement to 39.2% and Axis Bank reporting positive operating jaws.

Growth & Loan Book Dynamics

Retail and SME lending led growth across the sector. HDFC Bank’s retail loans rose 7.4% to ₹15.55 trillion, SME advances grew 17% to ₹5.72 trillion, and the retail-to-wholesale mix stood at 56:44. Kotak Mahindra’s SME advances increased 16% YoY, while unsecured retail lending moderated to 9.2% of total advances. ICICI Bank reported domestic loan growth of 10.6% YoY, driven by retail (+6.6%) and business banking (+24.8%), and Axis Bank grew total advances 12% YoY. Sequential domestic loan momentum was particularly notable for ICICI, accelerating from 1.5% in Q1 to 3.3% in Q2, signaling recovery ahead of H2 FY26.

Asset Quality

Asset quality remained a key differentiator. HDFC Bank maintained GNPA at 1.24% and NNPA at 0.40% with a PCR of 70%. Kotak Mahindra recorded GNPA of 1.39%, NNPA of 0.32%, and PCR of 77%. ICICI Bank’s gross NPA additions declined to ₹5,034 crore, net NPA stood at 0.39%, and PCR was 75%. Axis Bank reported GNPA at 1.46%, net NPA 0.44%, and net credit cost at 0.73% (-65 bps QoQ). Across the board, banks maintained strong provisioning buffers, with one-time adjustments, such as Axis Bank’s ₹1,231 crore crop loan provision, reflecting forward-looking conservatism.

CASA & Deposit Trends

CASA ratios exhibited varied trends. HDFC Bank’s CASA normalized slightly to 34% (-1 pp YoY), while Kotak’s CASA moderated to 42.3%. ICICI Bank’s CASA expanded 9.7% YoY, supporting deposit stability alongside total deposits of ₹16.13 lakh crore (+7.7% YoY). Axis Bank saw an 11% YoY growth in deposits, with new-to-bank deposits surging 44%, reflecting strong traction among premium and salary clients. Deposit growth and CASA management remain central to sustaining NIM amid rising funding costs.

Subsidiary & Fee Income Contribution

Subsidiary performance and fee income continue to provide diversification. HDFC Bank’s subsidiaries contributed about 11–12% of consolidated profit, with HDFC AMC at ₹7.2 billion (+24%) and HDB Financial Services ₹5.8 billion (+13%). Kotak’s AMC PAT rose 31% YoY and Kotak Alts increased fivefold, highlighting a strategic pivot toward non-interest income. Axis Bank subsidiaries, including Axis Finance (PAT +18%), Axis AMC (PAT ₹271 crore), and Axis Securities/Capital (₹175 crore and ₹93 crore), reinforced the bank’s fee-driven diversification. ICICI Bank’s ICICI Life (PAT ₹601 crore), ICICI Lombard (PAT ₹820 crore), and ICICI AMC/Securities (PAT ₹835 crore/₹425 crore) further illustrate the blend of interest and fee-based income stabilizing earnings.

Management Tone

Across the sector, management narratives reflected cautious optimism. HDFC Bank’s commentary shifted from defensive integration to confident franchise expansion. Kotak Mahindra oscillated between acknowledging margin and insurance pressures and highlighting fee-based growth areas. Axis Bank emphasized measured growth, operational efficiency, and future-ready digital strategies. ICICI Bank maintained a risk-calibrated tone, emphasizing balanced profitability, asset quality, and long-term franchise expansion. Behavioral cues suggest that leadership teams are increasingly focused on strategic, sustainable growth rather than short-term exuberance.

Final Word

Q2 FY26 results paint a nuanced picture of India’s leading private banks navigating growth, margin pressures, and evolving market dynamics. HDFC Bank reaffirmed its stability while expanding retail dominance. Kotak Mahindra balanced margin compression with capital and fee-income resilience. Axis Bank focused on margin stabilization, digital adoption, and measured advances growth. ICICI Bank demonstrated balanced growth across retail, business banking, and subsidiaries with superior asset quality. Across all banks, disciplined cost management, diversified income streams, and strong provisioning provide a buffer against macro and operational headwinds, signaling a transition from reactive strategies to calculated, sustainable expansion.