Indian banks to post 10.1% profit growth in Q1 as NIM outlook splits

HDFC, ICICI, and Axis Bank may report a marginal NIM decline, Motilal Oswal said.

Indian banks’ profit after tax is expected to grow by 10.1% year-on-year (YoY) for Q1 FY2027, although it would be 1.7% lower than the previous quarter, according to estimates by Motilal Oswal Financial Services Ltd.

The sector saw credit and deposit growth during the quarter, but net interest margin (NIM) outlook is mixed.

System credit growth was 17.1% as of 15 June 2026, whilst deposit growth was at 12%, Motilal Oswal said.

HDFC Bank, ICICI Bank, and Axis Bank are expected to report a marginal NIM decline, whilst IndusInd Bank (IIB), Federal Bank, and DCB Bank are expected to report NIM expansions.

Net interest income (NII) is expected to have grown 10.4% YoY or 2.9% quarter-on-quarter (QoQ) sector wide in the Q1 FY2027 period. HDFC and ICICI are expected to log 8.5% YoY and 10.5% YoY growth, respectively.

Axis Bank and Kotak Mahindra Bank are also expected to log double-digit NII growths of 10.6% YoY and 10.1% YoY, respectively.

Most of the banks have indicated that stress is easing in unsecured loans, Motilal Oswal said.

“Our channel checks suggest no immediate impact of the West Asia war, though we expect the rise in input costs and margin contraction to dent profit margins of underlying borrowers,” Motilal Oswal wrote.

Motilal Oswal expects steady credit costs for large [private sector banks (PVBs) and benign credit costs for [public sector undertaking (PSU)] banks.