Q2 FY26 results reveal HDFC Bank maintaining growth momentum with an 11% profit rise, ICICI Bank delivering steady gains despite share dip, IDFC First Bank posting strong profit surge on loan growth, and Yes Bank showing healthy returns with improved asset quality. Investors weigh stock prospects amid varying financial performances.
The latest Q2 FY26 earnings season has seen top private lenders—HDFC Bank, ICICI Bank, IDFC First Bank, and Yes Bank—shake up the banking sector narrative with mixed but telling performances. Their numbers and operational metrics offer diverse takeaways impacting stock buying decisions.
HDFC Bank continues to lead with robust profitability, reporting a standalone net profit of ₹18,641 crore, up 10.8% year-on-year. Net interest income (NII) grew 4.8%, and the bank’s net revenue advanced over 10%, reflecting resilient core earnings. Despite a slight dip in net interest margin (3.27% vs. 3.35% last quarter), asset quality remains solid with a credit cost of around 0.5%. The loan book expanded 10%, underscoring steady demand growth. However, the loan-to-deposit ratio surpassing 98% suggests the bank is deploying more loans relative to deposits, a factor for cautious monitoring. HDFC trades at a price-to-earnings ratio (P/E) near 21 times FY26 estimates.
ICICI Bank posted a 5.2% YoY net profit increase to ₹12,359 crore, surpassing market estimates despite a share price drop of over 2%. Net interest income rose 7.4%, bolstered by controlled provisions that fell nearly 26%. Its capital adequacy ratio improved to 15.76%, maintaining a cushion for growth. The bank’s steady core operating profit and healthy net interest margin (4.3%) highlight operational strength. ICICI is valued lower relative to peers, trading at approximately 16 times FY26 earnings.
IDFC First Bank impressed with a 76% jump in net profit to ₹352 crore, driven by a 19.7% year-on-year loan growth to ₹2.66 lakh crore. Although net interest margin eased to 5.59% due to funding mix changes, asset quality improved further, with gross and net non-performing assets declining. The strong customer base growth and solid capital adequacy ratio of 14.34% position IDFC well for continued expansion.
Yes Bank reported an 18.3% YoY rise in profit after tax to ₹225 crore alongside a 7.1% increase in deposits and 6.5% loan growth. It maintains a healthy CASA base and a net interest margin rising slightly to 2.5%. Asset quality trends positively with gross non-performing assets down sharply from prior years. Japan’s SMBC as a major stakeholder adds strategic depth, although the stock witnessed a share price dip amid cautious investor sentiment.
In summary, HDFC Bank remains a dominant player with consistent gains, ICICI Bank offers steadiness with scope for value, IDFC First’s growth narrative appeals, and Yes Bank shows recovery potential with improving fundamentals. Investors should evaluate these distinct stories alongside valuations and market conditions to determine bank stock purchases post-Q2 results.
Key highlights:
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HDFC Bank reports 11% profit growth, 10% loan expansion, credit cost steady at 0.5%
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ICICI Bank profit rises 5.2%, NII up 7.4%, provisions down 26%, capital adequacy at 15.76%
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IDFC First Bank’s net profit soars 76% on strong loan growth, asset quality improves
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Yes Bank PAT up 18.3%, deposit and loan growth steady, NIM rises to 2.5%, improved asset quality
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Market valuations: HDFC P/E ~21x, ICICI ~16x, Yes Bank over 20x
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Loan-to-deposit ratio and margin compression remain key focus areas for banks
Sources: CNBC-TV18, Moneycontrol, Economic Times, Financial Express, Hindustan Times, Yes Bank Investors, IDFC First Bank Financial Report
