On July 22, 2025, there was huge investor optimism in the Indian banking sector, with stocks of HDFC Bank and ICICI Bank gaining more than 2% after announcing a spectacular Q1FY26 earnings performance.
Investors who need to know how they can get better banking giant investment opportunities in the privately owned sector of the banking system, you will find in this detailed analysis insight into the comparison of the financial performance, growth indicators, and future opportunities of the two banks.
Market response and stock Performance
Both the banking shares showed great market confidence after earnings. ICICI Bank stock ended 2.71 percent up at Rs 1,464.50 on the NSE compared with the previous close and HDFC Bank rose 2.25 percent to settle at Rs 2,001.50.
Both banks have had impressive returns to date, with most shareholders earning around 14-15 percent, which is an indication that the faith that investors have so far shown in the private banking sector in India has been substantial.
The favorable response by the stock market is attributed to strong financial parameters and strategic plans divulged by the two banks, where HDFC Bank has recorded history with a 1:1 bonus issue and bonus dividend.
HDFC Bank vs. ICICI Bank—Core Business Growth Analysis
ICICI Bank Takes the Lead in Advances Growth
ICICI Bank led in lending performance in the year-on-year (YoY) advances by 12 against HDFC bank of 8.3 YoY. This notable margin shows that ICICI bank is more aggressive but well-rounded in entrusting credit.
ICICI Bank’s lending strategy showed remarkable balance:
- Retail advances grew 6.9% YoY
- Corporate advances expanded 7.5% YoY
- Total loan book reached substantial levels with strong quarterly momentum.
HDFC Bank, while growing steadily, showed a more conservative approach:
- Total advances reached ₹27,42,300 crore
- Retail segment growth of 8.1% YoY
- Corporate advances grew slower at 1.7% YoY
- Retail to corporate ratio maintained at 57:43
HDFC Bank vs. ICICI Bank—Deposit Mobilization Strengths
HDFC Bank has depicted a strong deposit-raising capacity of 16.5 percent YoY as it stood at 2,657,600 crore. This surpassed the decent 12.8 percent YoY growth in deposits of ICICI Bank to 1,608,500 crore.
Nevertheless, ICICI Bank enjoyed a lead in the quality of its deposit rates, where it has a better CASA (Current Account Savings Account) ratio of 38.7% as compared to 34 of HDFC bank. The increased ratio of the CASA level denotes a higher quality of deposits and a reduction in the costs of funding.
HDFC Bank vs. ICICI Bank—Financial Performance
ICICI Bank delivered stronger profitability growth:
- Standalone profit after tax (PAT) increased 15.5% YoY to ₹12,768 crore.
- Consolidated PAT rose 15.9% to ₹13,558 crore.
- Demonstrated consistent performance across all profit metrics.
HDFC Bank reported solid but lower growth:
- Standalone PAT grew 12.24% YoY to ₹18,155 crore
- Consolidated profit declined slightly by 1.31% YoY
- Higher absolute profit numbers due to larger scale
Revenue Generation
ICICI Bank’s core income performance stood out:
- Net interest income (NII) grew 10.6% YoY to ₹21,635 crore
- Non-interest income expanded 13% YoY to ₹7,200 crore
- Maintained superior net interest margin (NIM) at 4.34%
HDFC Bank showed mixed results:
- Net interest income grew 5.6% YoY to ₹31,400 crore
- Significant boost from HDB Financial Services IPO proceeds (₹10,000 crore)
- NIM contracted to 3.35% from 3.6% YoY
Non-Performing Assets (NPA) Comparison
Both banks maintained strong asset quality with marginal changes:
ICICI Bank’s Improvement Story:
- Gross NPA improved to 1.67% from 2.15% YoY
- Net NPA remained controlled at 0.41%
- Demonstrates effective risk management
HDFC Bank’s Stable Performance:
- Gross NPA slightly increased to 1.4% from 1.3% YoY
- Net NPA rose marginally to 0.5% from 0.4%
- Continues to maintain industry-leading asset quality.
Analyst Recommendations
Leading brokerage firm Antique Stock Broking maintains “Buy” ratings for both banks:
HDFC Bank:
- Target price: ₹2,270
- Positioned as top pick among large private banks
- Positive outlook on deposit traction and network expansion benefits
ICICI Bank:
- Target price raised to ₹1,680 from ₹1,640
- Expected RoA of 2.3-2.4% and RoE of 16-17% over FY27-28
- Anticipated recovery in loan growth during H2FY26
Investment metrics—Which Bank Wins?
Based on the Q1FY26 performance analysis, ICICI Bank emerges as the stronger performer across key metrics:
ICICI Bank’s Advantages:
- Superior advances growth (12% vs 8.3%)
- Higher profit growth rate (15.5% vs 12.24%)
- Better net interest margins (4.34% vs 3.35%)
- Improved asset quality trends
- Balanced retail-corporate lending approach
HDFC Bank’s Strengths:
- Larger absolute scale and market presence
- Superior deposit mobilization (16.5% vs 12.8%)
- Shareholder-friendly initiatives (bonus issue + dividend)
- Consistent market leadership position
Investment Strategy Recommendation
Industry expert Anuj Gupta from Ya Wealth Research & Advisory suggests a balanced approach: “Both banks are moving at a similar pace. Investors can consider splitting their allocation equally between the two.”
This strategy allows investors to benefit from ICICI Bank’s superior growth momentum while maintaining exposure to HDFC Bank’s market leadership and scale advantages.
Final thoughts
Even though both banks have enjoyed impressive Q1FY26 performances, the overall performance of ICICI Bank with respect to growth parameters, profitability improvement and operational effectiveness makes it a better choice in the near term. Nonetheless, HDFC Bank enjoys market leadership, deposit franchise and strategic plans that make it attractive in the long run.
ICICI Bank may be interesting to investors looking for exposure to growth, whereas the investors seeking dividend payments and stability might be tempted by HDFC Bank. An allocation dividing the investment in both banks would maximize the risk-adjusted returns in the changing banking environment in India.
