HDFC Bank Q3 Profit Rises 11.5%, ICICI Bank Earnings Fall 4%

HDFC Bank and ICICI Bank, two of India’s largest private lenders, reported contrasting third-quarter results for fiscal 2025-26. HDFC Bank posted a net profit of ₹18,653.75 crore, up 11.5% year-on-year, while ICICI Bank’s net profit fell 4.0% to ₹11,317.9 crore. The drivers differed: HDFC Bank saw broad-based growth, whereas ICICI’s bottom line was weighed down by extra provisioning on agri loans.

HDFC Bank’s strong Q3 performance

HDFC Bank’s Q3 results reflected solid core operations and robust fee income. The bank reported ₹18,653.75 crore profit, an 11.46% YoY increase. Total advances grew about 12% YoY, helping net interest income rise 6.4% to ₹32,615 crore. Other income was bolstered by treasury operations: treasury income surged 144% YoY to ₹2,227.6 crore. Asset quality remained healthy, with gross NPAs at 1.24% (down from 1.42% a year earlier) and net NPAs at 0.42%. Operating expenses did increase (by about 63% YoY) due to higher staff costs and an ~₹800 crore impact from new labour codes, but HDFC’s cost-to-income ratio stayed low (~21%). Overall, HDFC’s Q3 profit comfortably beat estimates, underscoring the bank’s ability to grow earnings while managing costs.

ICICI Bank’s Q3 earnings and agri-sector provisions

ICICI Bank’s quarterly profit was ₹11,317.9 crore, down 4.02% YoY. The decline largely reflected a one-off regulatory charge. The RBI’s inspection found that some loans in ICICI’s agri portfolio were misclassified, forcing the bank to make an additional ₹1,283 crore provision for agricultural loans this quarter. Excluding this charge, ICICI said its profit would have grown about 4% YoY. On core banking metrics, ICICI’s performance remained strong: advances grew 11.6% YoY and deposits grew about 9.2%, reflecting sustained credit demand. Net interest income was ₹21,932.2 crore, up 7.7% YoY. Asset quality continued to improve: gross NPA was 1.53% (down from 1.96% a year ago), and net NPA was just 0.37%. In short, ICICI’s underlying business showed healthy growth; the reported profit decline was driven mainly by regulatory provisioning, not a weakness in core operations.

Sector outlook and investor implications

Indian banking sector trends

These results come against a backdrop of robust credit growth and stable asset quality in India’s banking sector. Analysts note that loan demand rebounded strongly in Q3, aided by festive-season spending and GST cuts. Reuters reported that major lenders saw double-digit loan growth in the December quarter, and industry forecasts expected better earnings driven by rising advances and contained NPAs. The RBI also cut its policy rate by 125 basis points in 2025, which should ease banks’ funding costs going forward. In this environment, private banks like HDFC and ICICI are well-positioned to outperform, benefiting from lean operations and high-quality loan books.

Investor perspective

For investors, the key takeaway is that India’s top private banks remain fundamentally strong. HDFC Bank’s 11.5% profit jump reinforces confidence in its steady growth and conservative balance-sheet management. Its mix of retail and corporate lending, along with treasury gains, supports continued earning power. ICICI Bank’s profit dip appears to be a one-off anomaly: its operating profit (before provisions) grew, and its return ratios (ROA/ROE) remain among the highest in the industry. Both banks trade at premiums to market multiples, reflecting their superior franchises. Looking ahead, further margin improvement is expected as credit growth remains high and funding costs stay low. Analysts also note that the March quarter should benefit from deposit repricing and stronger unsecured lending, supporting future profits.

What Drove the Divergence Between HDFC and ICICI

While both banks operate in similar market conditions, their Q3 outcomes highlight how portfolio mix and regulatory exposure can influence quarterly performance. HDFC Bank benefited from diversified income streams, including steady retail lending, controlled credit costs, and strong treasury gains. Its conservative provisioning approach in earlier quarters also helped cushion profitability.

ICICI Bank, on the other hand, faced a short-term setback due to regulatory scrutiny of its agricultural loan classification. The additional provisioning impacted reported profits, even though underlying loan growth, margins, and asset quality trends remained stable. This divergence underlines the importance of risk management practices and regulatory compliance in shaping near-term earnings, even when core business momentum is intact.

Conclusion

In summary, HDFC Bank’s robust Q3 profit growth was powered by healthy loan expansion and a surge in treasury income. ICICI Bank’s modest earnings decline was largely due to RBI-mandated provisioning on agricultural loans. These results show that India’s banking sector is on a solid footing – advances are growing at double-digit rates and asset quality is improving. For investors, HDFC Bank’s strong numbers confirm its blue-chip status, while ICICI Bank’s setback is seen as temporary. Overall, the sector outlook remains positive, with both banks well-placed to benefit from India’s expanding credit demand.