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

The Indian banking sector is set to witness a crucial quarter as major banks like HDFC Bank, ICICI Bank, and SBI prepare to announce their Q2 results. According to a report by Motilal Oswal, these banks are expected to post a decline in pre-provision operating profit and PAT in Q2 FY26.

Q2 Earnings Expectations

For the private banks under Motilal Oswal’s coverage, the research firm estimates a 2% YoY and 18% QoQ decline in pre-provision operating profit. Additionally, PAT is expected to decline by 7.3% YoY and 6.7% QoQ in Q2 FY26. However, despite the decline in Q2 earnings, Motilal Oswal estimates a strong earnings CAGR of ~19.8% over FY26-28E for private banks.

The report also highlights the impact of the 50bp rate cut in June 2025 on banks’ lending yields, which will be fully reflected in Q2. However, the moderation in the cost of funds (CoF) will happen with a lag, according to Motilal Oswal.

Motilal Oswal’s Top Picks

Motilal Oswal has identified HDFC Bank, ICICI Bank, and SBI as its top picks ahead of the Q2 earnings. These banks are expected to perform well due to their strong franchise, improving asset quality, and robust growth prospects.

For instance, HDFC Bank share price has been a top performer in the banking sector, driven by its strong retail franchise and improving asset quality. Similarly, ICICI Bank share price has also been gaining traction due to its robust growth prospects and improving profitability.

Indian Banking Sector Outlook

The Indian banking sector has been undergoing a significant transformation in recent years, driven by the government’s initiatives to improve financial inclusion, reduce non-performing assets (NPAs), and enhance the overall health of the sector.

The implementation of measures like the Insolvency and Bankruptcy Code (IBC) and the formation of the National Asset Reconstruction Company Limited (NARCL) have helped in resolving stressed assets and improving the overall asset quality of banks.

Additionally, the growth in digital payments and the increasing adoption of technology have also contributed to the growth of the banking sector. The sector is expected to continue its growth momentum, driven by the government’s initiatives and the increasing demand for financial services.

Key Factors to Watch in Q2 Earnings

There are several key factors that investors and analysts will be watching in the Q2 earnings of banks. These include:

• Net interest income (NII) growth
• Non-performing assets (NPAs) and provision coverage ratio (PCR)
• Cost of funds (CoF) and net interest margin (NIM)
• Capital adequacy ratio (CAR) and return on equity (ROE)
• Digital banking and technology adoption

These factors will provide insights into the performance of banks and their ability to navigate the challenges in the sector.

Conclusion

In conclusion, the Q2 earnings of banks will be a crucial event for investors and analysts. The performance of banks like HDFC Bank, ICICI Bank, and SBI will be closely watched, and their results will provide insights into the overall health of the banking sector.

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