ICICI beats HDFC on growth, margins in Q1. Is the lead sustainable?

ICICI Bank reported stronger Q1FY27 results versus HDFC Bank, with 20% YoY loan growth to ₹16.3 trillion against HDFC Bank's 16% growth to ₹30.4 trillion. ICICI's net interest margin expanded 4bps sequentially to 4.36% and net profit grew 16% YoY to ₹14,800 crore, while HDFC's NIM declined 10bps to 3.4% with net profit up just 5% to ₹19,060 crore. HDFC continues to face margin pressure from its 2023 HDFC Ltd merger integration, though management expects 40-50bps reduction in cost of funds over time as high-cost borrowings of ₹40,000-50,000 crore mature.