The trend in India’s private banking sector has taken a new turn, given that HDFC Bank and ICICI Bank – the top performers for decades – exhibit different dynamics recently. Despite positive results being reported by both institutions, market behavior indicates the change in investors’ priorities following stock market adjustments. Over the last five years, ICICI Bank has proven its higher resistance in periods of decline compared to HDFC Bank, which experienced more severe drops in stock values from March 2026 highs.
The underlying reasons include the strategies of each institution over time. For instance, HDFC Bank traditionally had a retail-dominated loan portfolio, which helped achieve a diversified profile of the business, contributing to stability. Moreover, NPA ratios were always low, indicating the predictability and safety of the lender. Meanwhile, ICICI Bank initially had a high ratio of corporate lending, which caused some problems in previous cycles. Nevertheless, the bank’s balance sheet was considerably improved within recent years. The NIM ratio is comparable for both players, amounting to approximately 4%, but ICICI Bank has lower costs of funds and higher CASA ratio (near 39% vs 33%).
Financials of the last few weeks show that there is a difference in the pace of growth of both companies. ICICI Bank reports a higher growth in credit along with better financial ratios of profitability. On the other hand, HDFC Bank faces issues in integration after the merger of the company with HDFC Ltd. The result is a negative influence on ROA and cost-to-income ratio. Also, the share of foreign institutional investors (FIIs) in the bank falls from 52% in December 2023 to 44.5%. In contrast, domestic institutional investors (DIIs) increase their investments in HDFC Bank.
The recent shift from FIIs to DIIs in India should not be overlooked by Indian investors in banking companies listed at NSE and BSE. ICICI Bank becomes an investment choice for higher returns as the company enjoys continuous growth, steady ownership, and improvements in the quality of assets. HDFC Bank remains a favorite among conservative investors owing to robust fundamental factors and stable income streams. However, it seems like the market expects lower growth rates of the company in comparison with its rivals.
Going forward, investors are recommended to closely watch the upcoming quarter’s results, particularly the developments in terms of asset quality, credit expansion, and margins. Any decline in the FII positions of HDFC Bank may put downward pressure on the stock, whereas consistent wins in deals and expansion in ICICI Bank may help sustain its value. Technical signals also indicate that HDFC Bank is likely to continue facing downward pressure unless it makes a strong bottom formation.
Investors are encouraged to seek advice from SEBI-registered financial advisors.
Reviewed for accuracy and last updated on April 17, 2026.
