New Delhi, Oct. 21 -- The Street reacted differently to the September quarter (Q2FY26) results of India's top private sector banks, HDFC Bank and ICICI Bank. HDFC Bank's stock remained flat, while ICICI Bank's shares fell 3%. Investors may have been drawn to HDFC's seemingly stronger net profit growth of 10.8% year-on-year, compared with ICICI's 5.2% increase.

However, this market response may have overlooked three key factors.

The first is the quality of earnings, where ICICI Bank outperformed HDFC Bank in core operations. Adjusted for interest on income tax refunds, ICICI Bank's net interest margin (NIM) rose 3 basis points (bps) sequentially to 4.3% in Q2FY26, while HDFC's NIM slipped 8 bps to 3.27%. ICICI's margin expansion stems fr...