Indian banks face a Q2 paradox: FCNR boosts loan growth but margins shrink
HDFC Bank is in focus in a quarterly results development.
6 Oct 2026 · Economic Times Markets, ET Stocks
Indian banks are heading into the Q2 earnings season with strong loan growth, helped by FCNR(B) deposit inflows, but margins are likely to remain under pressure. Analysts expect healthy earnings growth on lower credit costs and stable asset quality, while favouring large private banks such as HDFC Bank, ICICI Bank and Kotak Mahindra Bank.
The analysis
Against that, the stock is -0.9% on the day at ₹705.30, and has returned -15.3% over three months. It sits 30% below its 52-week high, which means a good deal of bad news was already in the price. The banks sector has moved -4.0% over the same period, so HDFC Bank is running 11.3 points behind its peers.
With HDFC Bank, ICICI Bank and Kotak Mahindra Bank all implicated, this reads as a Banks-level move rather than a company-specific one, which is the more durable kind of signal.
Why it matters
- Earnings versus expectations is what actually re-rates a stock; the surprise matters more than the absolute number.
Market context
- It touches several names at once (HDFCBANK, ICICIBANK, KOTAKBANK), which points to a sector-level rather than company-specific driver.
- Sector exposure: Banks.
In this story
Related coverage
Banks vs NBFCs: Which stocks could benefit as RBI set to hike rates for the first time in 3 years?
HDFC Bank shares drop 15% in 3 months since Q1 results. Will Q2 earnings bring redemption as leadership cloud clears?
ICICI Prudential Life Insurance to focus on growing absolute VNB amid slump in FY24
ICICI Pru Life Q4 net profit falls 26% to Rs 174 cr, insurer announces dividend
Kotak, Axis, IndusInd Bank shares: Q2 business updates trigger sharp moves- How stocks reacted; key data details to know