Shares of leading private lenders HDFC Bank and ICICI Bank surged to record highs on Monday, as investors responded positively to their strong fourth-quarter results and the optimistic outlooks regarding loan growth and asset quality. By 9:40 am, HDFC Bank had risen 1.3%, while ICICI Bank gained 0.9%, both contributing significantly to the overall market performance. Their gains helped lift the Nifty Bank and Nifty Private Bank indices by nearly 2%, and pushed the Nifty 50 up by 0.6%, with HDFC Bank emerging as the index's top performer for the day.
Both banks posted Q4 earnings that surpassed analyst expectations, signaling the resilience of their businesses and their ability to navigate the challenges of the market. HDFC Bank reported improvements in margins and asset quality, with management expressing confidence in achieving above-industry loan growth for FY27, although no specific targets were set. The bank's consistent performance and outlook on growth were key factors driving investor confidence.
On the other hand, ICICI Bank delivered a solid all-around performance. The bank's net profit exceeded estimates by 6%, with a 16 basis point sequential expansion in its net interest margin (NIM). This growth was driven by higher yields and strong net interest income (NII) growth of 11% year-on-year. Additionally, Pre-provision operating profit (PPoP) rose by 17% YoY, aided by stable operating expenses and steady other income.
Despite moderate loan growth of 13.3% YoY, ICICI Bank’s deposit growth accelerated to 14%, and the bank's credit costs decreased to 27 basis points, reflecting improvements in asset quality. The bank's gross and net slippages fell by 35 and 45 basis points, respectively. ICICI Bank's cautious approach, focusing on tight underwriting and moderating growth in higher-risk portfolios, played a crucial role in maintaining its credit health.
Brokerage firm JM Financial has reiterated its BUY rating on ICICI Bank, with a target price of ₹1,650 based on an SOTP valuation. It expects some near-term margin compression due to the lagged transmission of rate cuts but anticipates that this will be offset by lower savings and term deposit rates. The brokerage projects average NIMs of 4.14% over FY26-27, with a compound annual growth rate (CAGR) of 13% in NII and PPoP, and 11% in PAT over the period from FY25-27.
Meanwhile, Jefferies continues to list both HDFC Bank and ICICI Bank as top picks within the banking sector, citing their consistent margin delivery and tight credit cost controls. Post-results, at least 16 analysts have raised their price targets for the two banks. The median target for ICICI Bank has moved up to ₹1,600, while HDFC Bank’s target has risen to ₹2,120, according to LSEG data.
Analysts at Emkay Global have pointed out that HDFC Bank is likely to benefit from a more accommodative regulatory stance, especially regarding loan-to-deposit ratios and liquidity norms. This, they believe, will help narrow its growth gap with peers and alleviate some concerns from investors about the bank's ability to expand in the near term.
In the broader private banking space, Yes Bank also saw a notable jump of nearly 5% after posting better-than-expected quarterly earnings. CEO Prashant Kumar stated that the lender aims for 12–15% loan growth in FY26, further fueling optimism in the sector. This performance from Yes Bank adds to the positive sentiment around India’s private banking sector, which has been outperforming expectations in recent quarters.
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