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

The Indian banking sector is gearing up for the Q2 earnings season, and Motilal Oswal has come out with its top picks, including HDFC Bank, ICICI Bank, and SBI. According to the brokerage firm, the impact of the big 50bp rate cut in Jun’25 on banks’ lending yields will be fully reflected in Q2, while the moderation in CoF will happen with a lag.

Private Banks’ Q2 Performance Preview

For the private banks under Motilal Oswal’s coverage, the brokerage firm estimates pre-provision operating profit to decline 2% YoY/ 18% QoQ and PAT to decline 7.3% YoY/6.7% QoQ in Q2 FY26. Despite the decline, Motilal Oswal estimates ~19.8% earnings CAGR over FY26-28E for private banks, driven by improvements in NPA provisions and regulatory requirements.

HDFC Bank: A Top Pick Ahead Of Q2 Earnings

HDFC Bank is one of Motilal Oswal’s top picks ahead of Q2 earnings, driven by its strong retail banking franchise, robust asset quality, and improving profitability. The bank’s Q2 performance is expected to be driven by a decline in provisions and an improvement in net interest margin.

ICICI Bank: A Close Second

ICICI Bank is another top pick for Motilal Oswal, driven by its strong corporate banking franchise, improving asset quality, and robust profitability. The bank’s Q2 performance is expected to be driven by a decline in provisions and an improvement in net interest margin.

SBI: A Value Pick

SBI is Motilal Oswal’s value pick ahead of Q2 earnings, driven by its strong retail banking franchise, improving asset quality, and robust profitability. The bank’s Q2 performance is expected to be driven by a decline in provisions and an improvement in net interest margin.

Key Themes To Watch Out For In Q2 Earnings

There are several key themes that investors should watch out for in the Q2 earnings season, including net interest income growth, provisions trajectory, asset quality trends, and profitability metrics. Additionally, investors should also watch out for any regulatory updates or macroeconomic trends that could impact the banking sector.

Conclusion

In conclusion, the Q2 earnings season is expected to be a crucial one for the Indian banking sector, with several key themes to watch out for. Motilal Oswal’s top picks, including HDFC Bank, ICICI Bank, and SBI, are expected to perform well, driven by their strong retail banking franchises, improving asset quality, and robust profitability. Investors should watch out for any regulatory updates or macroeconomic trends that could impact the banking sector.