India’s bank earnings season delivered a mixed message on Monday. HDFC Bank’s results beat expectations but failed to lift its shares. Axis Bank fell sharply despite a big increase in profit, while state-run lenders surged. Investors are weighing healthy loan growth and clean balance sheets against margins that have yet to recover.
HDFC Bank: a beat, but a muted reaction
India’s largest private lender reported its July–September results on Saturday, together with ICICI Bank and Axis Bank. Net profit at HDFC Bank rose 4.7% to ₹19,510 crore, with a crore equal to ten million. Consolidated profit rose 5.6% to ₹20,700 crore. Net interest income, the gap between what the bank earns on loans and pays on deposits, climbed 9.7% to ₹34,620 crore.
Asset quality remained strong. Gross non-performing assets fell to 1.11% of loans, and provisions for the quarter were ₹3,570 crore. Deposits rose 18.8%, and advances grew around 16%. Net interest margin was 3.16% of total assets.
The shares still slipped about 1.3% to 1.5% on Monday to roughly ₹718. Retail deposit growth of about 11% remains softer than at some rivals, and profit growth was held back by weaker other income and higher costs.
What analysts are saying
Brokerages largely stayed positive. Jefferies kept a Buy rating and a ₹880 target price, pointing to solid credit quality. Elara Capital also rates the stock a Buy and said momentum is gradually returning, though it cautioned that core earnings have not yet meaningfully accelerated and margin recovery remains a challenge.
Attention is now on leadership. Deputy managing director Kaizad Bharucha will leave at the end of December after three decades, and brokerages say the lack of a successor is a near-term overhang. The strategy of the bank’s new chief executive for balancing growth with faster margin improvement is the key thing to watch.
Axis Bank: strong profit, weaker shares
Axis Bank reported a 38% rise in quarterly profit to ₹7,003 crore, helped by lower provisions. But the result missed analyst estimates, and the shares dropped as much as 5% on Monday. The episode is a reminder that markets reward results against expectations more than they reward growth itself.
PSU banks and others rally
State-run lenders were the day’s winners. After Punjab National Bank posted better-than-expected second-quarter earnings, the Nifty PSU Bank index rose about 3%. PNB, Punjab & Sind Bank, Canara Bank and Union Bank gained as much as 8%. ICICI Bank rose around 1% as brokerages stayed bullish on its asset quality. Karur Vysya Bank hit a lifetime high, and Federal Bank earlier posted a record quarterly profit of ₹1,386 crore, up 45%.
The broader market
Benchmark indices were choppy. The Sensex opened about 120 points higher near 74,849 but later slipped, while the Nifty hovered around 23,050 in late-morning trade. Public-sector bank buying and renewed inflows from foreign institutional investors helped limit losses, even as global worries about AI spending weighed on sentiment.
What the results tell us
Across the sector, the trend is similar. Credit quality is solid and loan demand is healthy, but lenders are competing hard for deposits, and margins remain squeezed. Profit growth is therefore modest even when balance sheets look clean.
For borrowers, strong lender profitability and low bad loans suggest credit will stay available. For savers, deposit competition means banks are still motivated to offer attractive rates.
What to watch
Investors will follow HDFC Bank’s leadership changes, any commentary on margins and deposit growth from the remaining lenders reporting this week, and the Reserve Bank of India’s next policy moves.
