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Axis Bank Outpaces HDFC in Loan Growth
18 Oct
Summary
- Axis Bank's loan book grew 23%, surpassing HDFC Bank's 16.4%.
- Both banks saw robust deposit growth, aided by FCNR(B) deposits.
- Net interest margins experienced compression in Q2 FY27.
In the second quarter of FY27, HDFC Bank and Axis Bank disclosed robust financial performances. Axis Bank demonstrated superior loan growth, increasing its book by 23% year-on-year to Rs 13.73 lakh crore, outpacing HDFC Bank's 16.4% growth to Rs 31.95 lakh crore. Both banks saw substantial increases in deposits, with Axis Bank growing by 20.7% and HDFC Bank by 18.8%, significantly boosted by FCNR(B) deposits raised from overseas.
Despite this strong credit and deposit expansion, both HDFC Bank and Axis Bank experienced a contraction in their net interest margins (NIMs). HDFC Bank's NIM was 3.3%, down from 3.4% year-on-year, while Axis Bank's domestic NIM was 3.55%, a decrease from 3.8%. This margin compression is attributed partly to the RBI's earlier soft interest rate policy.
Asset quality remained stable, with net non-performing assets (NPAs) at 0.37% for HDFC Bank and 0.35% for Axis Bank. The ongoing Middle East crisis has not yet impacted their credit growth or NPA levels. HDFC Bank reported a standalone net profit of Rs 19,510 crore, a 4.7% year-on-year increase, while Axis Bank's net profit surged 37.6% to Rs 7,003 crore, benefiting from lower provisions.
Looking ahead, with the RBI's recent 0.25% rate hike in early October 2026, banks anticipate improved NIMs during the busy season. Both HDFC Bank and Axis Bank are trading at a price-to-book value of 1.9 times, suggesting they may be undervalued and worth adding to watchlists for 2026.
