HDFC Bank Tumbles Nearly 5% After Q1 Results; Axis Bank Slides Over 5%; ICICI Bucks Trend

Shares of HDFC Bank slumped nearly 5 per cent in early trade on Monday after the lender’s June 2026 quarter earnings failed to impress investors, with analysts pointing to a sharper-than-expected decline in net interest margins (NIMs) despite steady profit growth and improving asset quality.

At around 9:30 am, HDFC Bank shares were trading at Rs 781.10, down 4.7 per cent. The stock hit an intraday low of Rs 777.50 against a previous close of Rs 819.60.

The weakness spilled over to other banking stocks. Axis Bank dropped 5.3 per cent after its quarterly results, while Kotak Mahindra Bank declined more than 3 per cent. In contrast, ICICI Bank gained about 0.5 per cent as investors cheered its stronger-than-expected earnings.

The decline in banking

heavyweights weighed on the broader market. The Nifty 50 fell 0.6 per cent to 24,185.80, while the Sensex was down 0.72 per cent at 77,587.23. Sentiment also remained fragile as crude oil prices climbed above $90 per barrel amid escalating tensions in the Middle East.

HDFC Bank’s Margin Pressure Spooks Investors

HDFC Bank reported a 5 per cent year-on-year increase in standalone net profit at Rs 19,060 crore for the quarter ended June 2026, compared with Rs 18,155 crore a year earlier.

Net interest income (NII) rose 7 per cent to Rs 33,530 crore from Rs 31,440 crore, while interest income increased to Rs 79,363 crore.

However, the key concern for investors was the moderation in profitability. Net interest margin stood at 3.26 per cent on total assets and 3 per cent on interest-earning assets, with analysts saying the decline was steeper than expected.

Operating profit also fell sharply to Rs 28,169 crore from Rs 35,734 crore in the corresponding quarter last year, while total income declined to Rs 92,184 crore from Rs 99,200 crore.

On the positive side, asset quality continued to improve. Gross non-performing assets (GNPAs) declined to 1.17 per cent from 1.40 per cent a year ago, while net NPAs eased to 0.41 per cent from 0.47 per cent. Lower bad loans helped provisions and contingencies fall to Rs 3,060 crore from Rs 14,442 crore a year earlier.

ICICI Bank Gains On Strong Earnings

Unlike its peers, ICICI Bank emerged as an outperformer after reporting robust quarterly numbers. The lender posted a 15.95 per cent rise in standalone net profit to Rs 14,804 crore, while consolidated profit increased 13.88 per cent to Rs 15,440 crore.

Net interest income grew 12.7 per cent year-on-year to Rs 24,384 crore, supported by nearly 20 per cent growth in advances. Net interest margin improved slightly to 4.36 per cent.

ICICI Bank MD & CEO Sandeep Batra said the bank managed to expand margins despite the broader industry trend, aided by an income tax refund and repricing of term deposits. He, however, indicated that inflows under the FCNR(B) scheme could slightly dilute margins going forward, although they are expected to remain within the bank’s guidance range for FY27.

Asset quality also strengthened, with the gross NPA ratio improving to 1.38 per cent from 1.67 per cent a year ago.

Axis Bank Slides Despite 23% Profit Growth

Axis Bank shares fell more than 5 per cent after investors focused on margin compression despite a strong rise in earnings. The lender reported a 23 per cent increase in standalone net profit to Rs 7,114 crore, while consolidated profit rose 22.23 per cent to Rs 7,632 crore.

Net interest income increased 8 per cent to Rs 14,646 crore, driven by a 19 per cent jump in advances. However, net interest margin narrowed to 3.46 per cent from 3.80 per cent a year earlier and 3.73 per cent in the previous quarter.

Managing Director and CEO Amitabh Chaudhry said the bank believes margins have bottomed out in the current cycle and are likely to improve going forward, although he did not provide a specific target.

The bank also reported lower provisions, which helped support profitability. Gross slippages declined on a yearly basis, though the gross NPA ratio edged up marginally to 1.28 per cent from 1.23 per cent in the March quarter.

Kotak Mahindra Bank Also Under Pressure

Kotak Mahindra Bank shares also traded in the red after its quarterly earnings. The bank reported a 22.55 per cent rise in consolidated net profit to Rs 5,480 crore, while standalone profit increased to Rs 4,123 crore.

Net interest income rose 9 per cent to Rs 7,928 crore, but net interest margin declined to 4.53 per cent from 4.65 per cent a year ago and 4.67 per cent in the previous quarter.

Asset quality remained healthy, with the gross NPA ratio improving to 1.18 per cent from 1.48 per cent a year earlier, while advances and deposits grew 15 per cent and 14 per cent, respectively.

Banking Stocks Drag Market Lower

The sharp decline in HDFC Bank and Axis Bank outweighed gains in ICICI Bank and Reliance Industries, keeping benchmark indices under pressure in early trade.

Apart from earnings-related concerns, investor sentiment remained cautious after crude oil prices surged above $90 a barrel following continued geopolitical tensions in the Middle East, raising concerns over inflation and the outlook for global growth.