All four leading private sector lenders – HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank – announced growth in net profit and net interest income for the July‑September quarter of the current financial year, while also reporting an improvement in asset quality at the end of September. The banks recorded higher earnings and net interest income, yet the cost of raising funds rose sharply, impacting net interest margins. The Economic Times noted a sequential rise of around 15 basis points in the cost of funds, driven by strong growth in higher‑cost term deposits. This trend affected all four lenders’ profitability metrics.

The rise in deposit mobilisation through the Foreign Currency Non‑Resident (Bank) FCNR(B) scheme increased the banks’ cost of funds, thereby compressing net interest margins (NIM) across the sector. Analysts highlighted that the higher cost of raising funds, coupled with the sequential increase in term deposits, contributed to the margin pressure observed in the second quarter. Despite this, the banks managed to maintain healthy net interest income growth, reflecting resilience in their loan‑to‑deposit dynamics.

HDFC Bank, the country’s largest private lender, reported a net profit of ₹9,510 crore in Q2 FY27, a 5% rise from ₹18,641 crore in the same period last year. Its net interest income (NII) increased 10% to ₹34,619 crore from ₹31,551 crore year‑ago. The bank’s net interest margin stood at 3.16% on total assets and 3.32% on interest‑earning assets, down from 3.27% in the year‑ago period. Asset quality improved, with gross non‑performing assets (NPA) as a percentage of total advances at 1.11% versus 1.24% last year, and NPAs at 0.37% of total advances.

ICICI Bank, the second largest private lender, posted a 20.1% rise in net profit to ₹14,843 crore in Q2 FY27 from ₹12,359 crore in the corresponding quarter of FY26. Net interest income grew 17.7% YoY to ₹25,339 crore from ₹21,529 crore. However, the lender’s NIM fell 12 basis points to 4.18% from 4.30% in the previous year, while expenses increased 14%. Interest income advanced 17.6% to ₹49,110 crore from ₹41,757 crore. Asset quality improved, with gross NPAs at 1.20% versus 1.58% a year earlier.

Axis Bank’s net profit surged 38% to ₹7,003 crore from ₹5,089 crore in Q2 FY26, largely driven by a 52.2% drop in provisions to ₹1,693 crore from ₹3,547 crore. Net interest income rose 11.8% YoY to ₹15,371 crore from ₹13,745 crore, and sequentially increased 4.9% to ₹14,646 crore. Interest expense grew 22%, outpacing the 17% rise in interest income, leading to an 11% rise in net interest income. The bank’s NIM fell to 3.36% from 3.73% a year earlier.

Kotak Mahindra Bank reported a 29% rise in net profit to ₹4,212 crore in Q2 FY27 from ₹3,253 crore in the year‑ago period. Net interest income increased 16% annually to ₹8,459 crore from ₹7,311 crore. The bank’s NIM softened to 4.31% from 4.54%. Asset quality improved, with gross NPA at 1.04% compared with 1.39% a year earlier. The Mumbai‑based lender’s performance reflects a combination of higher earnings and better asset quality during the quarter.