Banks Q2 Results Preview: HDFC Bank, ICICI Bank, SBI Is Motilal Oswal's Top Pick Ahead Of Q2 Earnings

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Motilal Oswal Report

For the private banks under our coverage, we estimate pre-provision operating profit to decline 2% YoY/ 18% QoQ and PAT to decline 7.3% YoY/6.7% QoQ in Q2 FY26. We estimate ~19.8% earnings CAGR over FY26-28E for private banks.

Estimate NII to grow 0.6% YoY/fall 2% QoQ in 2QFY26. Among large private banks under our coverage, NII growth is estimated at 2.3% YoY (-2% QoQ) for HDFC Bank and 5.5% YoY (-2.3% QoQ) for ICICI Bank, whereas NII is expected to decline by 2.3% YoY/2.9% QoQ for Axia Bank, 4.2% YoY/0.8% QoQ for Kotak Mahindra Bank and 2.3% YoY/1% QoQ for Federal. 

Unsecured retail stress shows early signs of easing, but challenges persist in cyclical sectors like CV loans and MSMEs, with credit costs expected to normalize in H2 FY26. Large private banks with more diversified and secured portfolios continue to fare better

We estimate PSU banks’ PAT to decline 7.1% YoY (down 1.9% QoQ) in Q2 FY26E, owing to a decline in NIMs and moderation in treasury gains for most PSBs, barring Punjab National Bank.

NII is likely to decline 2.5% YoY (down 1.7% QoQ). Opex is likely to be under control, though treasury gains are expected to moderate as bond yields remain range-bound with some recent up-moves. The upcoming CRR cut and ongoing deposit repricing should aid medium-term margins.

Asset quality outlook stable: We expect stable asset quality trends for PSU banks, aided by controlled slippages and robust PCR.

We estimate PSU banks to report earnings CAGR of 15.2% over FY26-28E.

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