In the wake of their Q3 FY26 results, ICICI Bank and HDFC Bank experienced profit booking, leading to a slight dip in their share prices. This reaction, however, prompts investors to consider their next steps. Here's a breakdown of the situation and expert recommendations:

ICICI Bank's Q3 FY26 Performance and Market Reaction

ICICI Bank reported a consolidated net profit of ₹11,317.86 crore for the December quarter, a 4.02% year-on-year decline compared to ₹11,792.42 crore the previous year. This decrease was primarily attributed to higher one-off provisions, including ₹1,283 crore for agricultural loans that were incorrectly classified as priority sector advances, as mandated by the RBI. Excluding treasury, profit before tax (PBT) decreased to ₹14,957 crore in Q3 FY26, from ₹15,289 crore in the same period the year before.

Despite the profit dip, the bank's core performance remained steady. Net interest income (NII) grew by 7.7% year-on-year to ₹21,932 crore, driven by a 12% year-on-year loan growth, particularly in the corporate and mortgage segments. Net Interest Margin (NIM) was stable at 4.3%. Asset quality also showed resilience, with the gross NPA ratio easing to 1.53% from 1.58% in the previous quarter.

Following the results, ICICI Bank shares dropped as much as 3% to ₹1,367 on the NSE during early trade on January 19. However, the bank's board approved a fresh two-year term for Managing Director and CEO Sandeep Bakhshi, extending his tenure until October 2028, which was viewed positively by analysts.

HDFC Bank's Q3 FY26 Performance and Market Reaction

HDFC Bank reported a standalone net profit increase of 11.5% year-on-year to ₹18,653.75 crore for Q3 FY26. Net interest income (NII) rose by 6.4% to ₹32,615 crore from ₹30,653 crore year-on-year. The core net interest margin was 3.35% on total assets and 3.51% based on interest-earning assets. Asset quality remained stable, with the gross NPA ratio flat at 1.24% sequentially.

Despite the positive results, HDFC Bank's share price traded flat on January 19, with a slight dip of 0.48% to ₹926.65. While loan growth improved to 12% year-on-year, deposit growth remained subdued at 11.6% year-on-year, leading to a higher credit-deposit (CD) ratio of 98.7%. Analysts also pointed out that gross NPAs increased 2.59% to ₹35,178.98 crore from ₹34,289.48 crore in the September 2025 quarter, while net NPAs rose 4.66% to ₹11,981.75 crore from ₹11,447.29 crore, QoQ.

Expert Recommendations for Investors

Despite the profit booking, several brokerages maintain a positive outlook on both banks:

• ICICI Bank:

  • Motilal Oswal has a "BUY" rating with a target price of ₹1,750, citing stable margins, healthy loan growth, and resilient asset quality.
  • Jefferies has a "Buy" rating with an increased target price of ₹1,730 per share, highlighting loan growth and the CEO's extended tenure.
  • CLSA has an "Outperform" rating with a target price of ₹1,700 per share.
  • Kotak Securities maintained its 'buy' rating on ICICI Bank with a target price of Rs 1,800.

  • HDFC Bank:

  • Nuvama Institutional Equities has a "Buy" rating, expecting improvement in deposit growth and NIM. They maintain a target price of ₹1,170 apiece.

  • CLSA reiterated its Outperform rating on HDFC Bank stock with a target price of Rs 1,200 per share.

Factors for Investors to Consider:

• One-off Provisions: For ICICI Bank, the decline in profit was largely due to one-time provisions related to agricultural assets. Excluding these, the core performance was in line with expectations.
• Leadership Continuity: The extension of Sandeep Bakhshi's term as CEO of ICICI Bank provides stability and clarity in leadership.
• Deposit Growth: HDFC Bank's subdued deposit growth is a key area to monitor. Stronger deposit mobilization is needed to support future growth.
• Asset Quality: While both banks have shown stable asset quality, any deterioration in this area could impact future performance.
• Market Volatility: The Indian stock market is currently experiencing volatility due to global cues and the upcoming Union Budget 2026. Investors should be prepared for potential fluctuations.

Overall Investment Strategy

Given the long-term growth potential of the Indian market and the stable core performance of both ICICI Bank and HDFC Bank, analysts suggest that investors with a long-term view should consider holding or even buying these stocks. However, it's crucial to remain cautious, monitor the banks' performance, and stay informed about market trends. Consulting with a SEBI registered investment advisor is also recommended for personalized guidance.