HDFC Bank vs Kotak vs Axis: The Indian banking sector is a cornerstone of the economy, and private banks like HDFC Bank, Kotak Mahindra Bank, and Axis Bank play a pivotal role in driving financial growth. As investors and customers eagerly await quarterly results, the Q1 FY26 (April-June 2025) performances of these banking giants provide critical insights into their financial health, operational efficiency, and market positioning.
This article offers a comprehensive HDFC Bank vs Kotak vs Axis comparison, diving into their Q1 bank results to help you understand which bank stands out in this head-to-head battle. Whether you’re an investor, a financial enthusiast, or a customer, this analysis will guide you through key metrics, trends, and strategic moves shaping these banks’ trajectories in 2025.
Why Compare Q1 FY26 Results?
Contents
The first quarter of FY26 (June 2025) is a crucial period for assessing how banks are navigating challenges like interest rate fluctuations, regulatory changes, and economic shifts. With the Reserve Bank of India (RBI) cutting repo rates by 25 basis points to 6% in June 2025, banks faced pressure on their net interest margins (NIMs) while striving to grow deposits and advances. Comparing HDFC Bank vs Kotak vs Axis reveals their strengths, weaknesses, and ability to adapt in a dynamic environment, helping stakeholders make informed decisions.
Key Performance Metrics: A Head-to-Head Comparison
To provide a clear picture, let’s break down the Q1 FY26 results across critical financial and operational metrics, including net profit, net interest income (NII), net interest margin (NIM), loan growth, deposit growth, asset quality, and return on assets (RoA).
Net Profit: Who’s Leading the Pack?
Net profit reflects a bank’s overall profitability after accounting for expenses and provisions. Here’s how the three banks performed:
- HDFC Bank: Reported a consolidated net profit of ₹16,258 crore, a slight decline of 1.32% year-on-year (YoY) from ₹16,474.85 crore in Q1 FY25. Despite a one-time gain of ₹9,128 crore from the HDB Financial IPO, the bank’s standalone net profit grew impressively by 12.2% YoY to ₹18,155 crore. This growth highlights HDFC’s ability to maintain profitability despite provisioning ₹14,442 crore, including ₹9,000 crore as floating buffers.
- Kotak Mahindra Bank: Faced challenges with a 7% YoY decline in standalone net profit, impacted by margin pressures and operational costs. Excluding exceptional items, the bank’s profit performance remained subdued, reflecting a cautious approach in a competitive market.
- Axis Bank: Recorded a standalone net profit of ₹5,806 crore, down 3.8% YoY, affected by stricter non-performing asset (NPA) recognition norms costing ₹614 crore. This underwhelming performance disappointed investors, as Axis struggled with margin compression and asset quality issues.
Winner: HDFC Bank, with its robust standalone profit growth, outperforms its peers, showcasing resilience despite a marginal consolidated profit dip.
Net Interest Income (NII) and Net Interest Margin (NIM)
NII represents the difference between interest earned on loans and interest paid on deposits, while NIM indicates profitability from interest-earning assets.
- HDFC Bank: NII grew by 5.4% YoY to ₹31,438 crore, but NIM contracted to 3.35% from 3.46% a year ago, reflecting the impact of lower loan rates post-RBI’s repo rate cut. On interest-earning assets, NIM was 3.5% in Q1 FY26, down from 3.7% in Q1 FY25.
- Kotak Mahindra Bank: NII specifics were not detailed, but NIM stood at 4.65%, down from 5% a year earlier, indicating significant pressure from lower lending rates and slower deposit rate adjustments.
- Axis Bank: NII grew marginally by 0.8% YoY to ₹13,560 crore, with NIM dropping to 3.80% from 4.05%. The bank faced challenges from cautious lending and elevated credit costs.
Winner: Kotak Mahindra Bank leads in NIM, maintaining a higher margin despite a decline, while HDFC Bank excels in absolute NII growth due to its larger scale.
Loan and Deposit Growth
Loan and deposit growth are critical indicators of a bank’s ability to expand its business and attract low-cost funds.
- Loan Growth:
- HDFC Bank: Advances grew by 6.7% YoY to ₹26.28 lakh crore, with retail loans up by 8.1% and small/mid-market enterprise loans by 17.1%. Corporate loans grew modestly at 1.7%.
- Kotak Mahindra Bank: Outpaced peers with a 14% YoY advance growth to ₹4.4 lakh crore, reflecting aggressive lending strategies, particularly in retail and SME segments.
- Axis Bank: Advances increased by 8% YoY to ₹10.59 lakh crore, but growth was the slowest in 15 quarters, signaling cautious lending amid asset quality concerns.
- Deposit Growth:
- HDFC Bank: Deposits surged by 16.4% YoY to ₹27.64 lakh crore, with CASA deposits up by 8.5% to ₹9.37 lakh crore, showcasing strong liability management.
- Kotak Mahindra Bank: Specific deposit growth figures were not highlighted, but its high CASA ratio (historically around 60%) supports its ability to access low-cost funds.
- Axis Bank: Deposits grew by 9% YoY, lagging behind HDFC and indicating challenges in mobilizing funds in a competitive market.
Winner: Kotak Mahindra Bank shines in loan growth, while HDFC Bank dominates deposit growth, leveraging its extensive network of 9,499 branches and 21,251 ATMs.
Asset Quality: Managing NPAs
Asset quality, measured by non-performing assets (NPAs), reflects a bank’s ability to manage credit risk.
- HDFC Bank: Net NPA ratio rose slightly to 0.47% from 0.39% a year ago, but gross NPA remained low at 1.47% in Q1 FY22 (recent data unavailable for Q1 FY26). The bank’s slippage ratio of 1.25% in Q2 FY25 was notably lower than peers, underscoring prudent risk management.
- Kotak Mahindra Bank: Maintained a stable net NPA ratio of 0.34% in Q1 FY26, slightly better than 0.35% a year ago, supported by a strong retail-oriented loan book.
- Axis Bank: Net NPA ratio increased to 0.45% from 0.34%, impacted by stricter NPA norms and higher slippages (1.8-1.9% in Q2 FY25), signaling asset quality stress.
Winner: Kotak Mahindra Bank edges out with the lowest net NPA ratio, while HDFC Bank’s conservative lending strategy ensures robust asset quality.
Return on Assets (RoA)
RoA measures how efficiently a bank uses its assets to generate profits.
- HDFC Bank: Recorded an RoA of 0.48% (non-annualized) in Q1 FY26, translating to an annualized RoA of approximately 1.92%, supported by strong provisioning and operational efficiency.
- Kotak Mahindra Bank: Matched HDFC’s non-annualized RoA of 0.48%, indicating comparable efficiency despite profit challenges.
- Axis Bank: Lagged with an annualized RoA of 1.47%, reflecting weaker profitability and asset quality issues.
Winner: HDFC Bank and Kotak Mahindra Bank tie, with both demonstrating strong asset utilization.
Comparative Table: Q1 FY26 Snapshot
| Metric | HDFC Bank | Kotak Mahindra Bank | Axis Bank |
|---|---|---|---|
| Net Profit (YoY) | ₹18,155 cr (+12.2%) | -7% YoY decline | ₹5,806 cr (-3.8%) |
| NII (YoY) | ₹31,438 cr (+5.4%) | Not specified | ₹13,560 cr (+0.8%) |
| NIM | 3.35% (3.5% on assets) | 4.65% | 3.80% |
| Loan Growth (YoY) | 6.7% (₹26.28 lakh cr) | 14% (₹4.4 lakh cr) | 8% (₹10.59 lakh cr) |
| Deposit Growth (YoY) | 16.4% (₹27.64 lakh cr) | Not specified | 9% |
| Net NPA | 0.47% | 0.34% | 0.45% |
| RoA (Annualized) | 1.92% | 1.92% | 1.47% |
Strategic Insights and Market Positioning
HDFC Bank: The Steady Giant
HDFC Bank’s Q1 FY26 results highlight its strategic focus on balancing growth and stability. Its cautious approach to unsecured loans (3.8% growth in Q3 FY24-Q1 FY25) has shielded it from the asset quality stress faced by peers. The bank’s robust provision buffer and extensive branch network (9,499 branches) position it to capitalize on improving economic conditions in H2 FY26. Analysts, including Motilal Oswal, remain optimistic, projecting a target price of ₹2,050 per share.
Kotak Mahindra Bank: The Agile Contender
Kotak’s aggressive loan growth and high NIM make it a strong player in retail banking. Its high CASA ratio and 2,154 branches enable access to low-cost funds, supporting lending expansion. However, the 7% profit decline raises concerns about cost management and margin sustainability. Investors are closely monitoring Kotak’s ability to maintain its high NIM in a low-rate environment.
Axis Bank: The Struggling Challenger
Axis Bank’s lackluster Q1 performance, marked by profit declines and asset quality issues, has led to downgrades by brokerages like Nuvama Institutional Equities. The bank’s cautious lending and high credit costs suggest a focus on cleaning up its loan book, but this may keep slippages elevated in the near term. Analysts see short-term potential with a target price of ₹1,025, but Axis trails its peers in long-term stability.
Real-World Example: Investor Sentiment
Investor reactions to the Q1 FY26 results reflect the banks’ market positioning. HDFC Bank’s stock closed at ₹2,004.5, near its 52-week high of ₹2,035, signaling strong confidence despite a 0.5% dip on July 25, 2025. Kotak Mahindra Bank’s stock fell 0.8% to ₹2,125, indicating caution due to profit declines. Axis Bank’s muted results and rating downgrades have dampened investor enthusiasm, with its stock underperforming its peers.
FAQ: Key Questions Answered
Q: Which bank performed best in Q1 FY26?
A: HDFC Bank outperformed with strong net profit growth, robust deposit mobilization, and stable asset quality, making it a top pick for investors.
Q: Why did Kotak Mahindra Bank’s profit decline?
A: Kotak’s 7% YoY profit decline was driven by margin compression and higher operational costs, despite strong loan growth.
Q: Is Axis Bank a good investment after Q1 FY26?
A: Axis Bank’s weak performance and asset quality issues make it less attractive for long-term investors, though short-term traders may find opportunities.
Q: How does the RBI’s repo rate cut impact these banks?
A: The 25-basis-point repo rate cut to 6% in June 2025 reduced lending rates, pressuring NIMs across all three banks, with Kotak and Axis facing sharper declines.
Conclusion
In the HDFC Bank vs Kotak vs Axis head-to-head battle of Q1 bank results, HDFC Bank emerges as the clear leader, balancing profitability, deposit growth, and asset quality. Kotak Mahindra Bank excels in loan growth and NIM but faces profitability challenges. Axis Bank lags due to weak profit growth and asset quality concerns, making it the weakest performer this quarter. For investors, HDFC Bank offers stability and long-term potential, while Kotak remains a strong contender for growth-focused portfolios. Axis Bank may appeal to short-term traders but requires caution.
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