HDFC Bank vs Icicibank Q3 FY25

HDFC Bank's Q3 FY25 results reflect a challenging macro environment with tight liquidity and moderating urban demand. The bank reported robust average deposit growth of 15% YoY, outpacing loan growth of 8% YoY, as it continues to normalize its credit-deposit ratio. Net interest margins remained range-bound near 3.4%, with headwinds from tight liquidity and CASA compression offset by lower borrowing costs. Asset quality remained stable, with PCR excluding agri at 71%, though agri slippages were seasonally elevated. Management reiterated its glide path: FY25 loan growth below system, FY26 in line, and FY27 above system. Key risks include persistent margin pressure from deposit mix shift and potential stress in unsecured segments, though management expressed confidence in portfolio stability.

Guidance read

FY25 loan growth below system, FY26 in line, FY27 above system: Management reiterated its glide path: loan growth will be slower than the system in FY25, in line in FY26, and faster in FY27, as the credit-deposit ratio normalizes. Deposit growth to continue outpacing loan growth: The bank expects to maintain deposit growth ahead of loan growth to further reduce the credit-deposit ratio, supported by strong liability franchise. Cost control with productivity gains: Management aims to keep cost growth tight through productivity improvements, while continuing investments in branches, people, and technology.

Risk read

Key risks include Margin pressure from CASA compression — CASA ratio continues to decline as customers shift to term deposits in a high-rate environment, pressuring NIMs despite lower borrowing costs.; PSL shortfall in SMF and weaker sections — The bank faces a ~1% shortfall in priority sector lending for small/marginal farmers and weaker sections, which may require costly PSLC purchases or RIDF contributions.; Potential stress in unsecured retail loans — While management asserts stability, the unsecured portfolio is written off at 150 days, implying rapid provisioning if delinquencies rise, which could impact earnings..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

ICICI Bank reported a steady Q3 FY25 with PAT growing 14.8% YoY to ₹117.92 billion, driven by core operating profit growth of 13.1% YoY and strong fee income (+16.3% YoY). Domestic loan growth was 15.1% YoY, led by business banking (+31.9%) and corporate (+13.2%), while retail slowed to 10.5% due to cautious unsecured lending. NIM compressed to 4.25% (down 18bps YoY) from deposit cost pressure and KCC seasonality. Asset quality remained stable with net NPA at 0.42% and contingency provisions of ₹131 billion (1% of loans). Management guided for sustained credit costs around 50bps and continued investment in technology and branches. Risk: Unsecured retail slippages could rise if economic conditions weaken, though management expects stabilization.

Guidance read

Credit cost around 50bps: Management reiterated that reported credit cost of 37bps is below the sustainable level of ~50bps, with no expectation of a dramatic increase. Continued investment in technology and branches: The bank will keep investing in technology (10.5% of opex), people, and distribution, adding 129 branches in Q3. Focus on risk-calibrated profitable growth: Management aims to grow market share across key segments while maintaining strong balance sheet and prudent provisioning.

Risk read

Key risks include Unsecured retail slippages — Personal loan and credit card portfolios have seen increased delinquencies over the past six quarters; management has taken corrective actions but trend may persist.; NIM compression from deposit cost — Cost of deposits rose to 4.91% from 4.88% sequentially, and NIM declined 18bps YoY; further pressure could impact profitability.; Business banking credit risk — Analyst questioned what could go wrong in business banking; management cited granularity and collateral but acknowledged need for tight monitoring..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.