HDFC Bank vs Axis Bank (2026): Deposits, NIM, ROA & Which Is Better?
A bank does not manufacture loans. It manufactures a spread between money coming in and money going out.
HDFC Bank versus Axis Bank in 2026 is best understood as a funding-engine comparison rather than a market-cap comparison.
HDFC Bank has more than twice Axis Bank's deposits and advances.
Axis, however, grew both deposits and loans faster in Q1 FY2027, carries a higher CASA ratio and currently earns a slightly wider net interest margin.
That creates an unusual setup.
The bigger bank is trying to restore the profitability of each rupee on its enormous balance sheet after the HDFC Ltd merger.
The smaller bank is trying to prove that rapid credit growth can continue without sacrificing underwriting discipline.
The BullRun Deposit Productivity Test
For a bank, deposit growth matters only if deposits can be converted into profitable, well-underwritten assets.
This framework is more useful than asking which bank simply reported more net profit.
HDFC will almost always report larger absolute profit because its balance sheet is enormous.
The commercial question is which bank currently earns better economics from each rupee of funding and each rupee of equity.
HDFC Bank vs Axis Bank: Q1 FY2027 scorecard
| Metric | HDFC Bank | Axis Bank | Current Edge |
|---|---|---|---|
| Period-end deposits | ₹31.71 lakh Cr | ₹13.73 lakh Cr | HDFC scale |
| Deposit growth | +14.7% YoY | +18% YoY | Axis growth |
| Gross / net advances | ₹30.61 lakh Cr gross advances | ₹12.62 lakh Cr net advances | HDFC scale |
| Advance growth | +15.4% YoY gross advances | +19% YoY net advances | Axis growth |
| CASA ratio | 32.3% | 38% month-end / 37% QAB | Axis |
| NIM | 3.26% on total assets / ~3.40% on earning assets | 3.46% | Axis modestly |
| Q1 NII | ₹33,536 Cr | ₹14,646 Cr | HDFC scale |
| NII growth | +6.7% | +8% | Axis |
| Standalone PAT | ₹19,060 Cr | ₹7,114 Cr | HDFC scale |
| PAT growth | +5% reported; ~10% adjusted for prior-year one-offs | +23% | Axis |
| Standalone ROA | ~1.85% | 1.51% | HDFC |
| Standalone ROE | ~13.8% | 14.16% | Axis slightly |
| GNPA | 1.17% | 1.28% | HDFC |
| NNPA | 0.41% | 0.39% | Axis slightly |
| Credit cost | ~0.40% | 0.63% | HDFC |
| Total capital adequacy | 19.6% | 16.67% | HDFC |
| CET1 | ~17.4% | 14.64% | HDFC |
| Fresh late-August P/E | ~14x | ~14-15x | Very similar |
| Fresh P/B | ~1.8-1.9x | ~1.8x | Very similar |
The most interesting finding is not that HDFC is bigger. It is that the valuation gap between the banks is now remarkably small despite very different current operating trajectories.
HDFC Bank's central problem is visible in one number: 32.3% CASA
HDFC has an enormous deposit franchise, but a larger portion of those deposits now sits in relatively expensive term deposits.
CASA deposits grew approximately 9.4% year on year.
Time deposits grew approximately 17.4%.
That is helpful for funding growth.
It is less helpful for funding cost.
The bank is still carrying the structural consequences of absorbing a large mortgage balance sheet during the HDFC Ltd merger.
Loans arrived faster than low-cost deposits could be recreated.
The current investment thesis is therefore partly a liability-repair story.
Why does HDFC's loan-to-deposit position matter?
Gross advances of roughly ₹30.61 lakh crore against deposits of ₹31.71 lakh crore imply that most of the deposit base is already deployed.
This is not inherently unsafe.
But it gives HDFC less room than a low-credit-deposit bank to grow loans without also raising deposits aggressively.
When deposit competition is intense, rapid deposit growth usually requires higher rates.
Higher rates raise funding cost.
Higher funding cost suppresses NIM.
That chain explains why HDFC's margin recovery has taken longer than investors originally expected after the merger.
HDFC's Q1 margin reached a new low even though credit growth was healthy
Net interest margin declined to 3.26% on total assets and around 3.40% based on interest-earning assets.
The problem was not weak loan demand.
Gross advances increased 15.4% year on year.
The mix shifted toward faster-growing corporate and small-and-mid-market lending while retail growth was slower.
Wholesale loans generally carry lower spreads than unsecured retail credit.
A growth quarter can therefore dilute NIM when lower-yielding products grow fastest.
This is why HDFC's ₹33,536 crore NII grew only 6.7%
Balance-sheet growth did not translate one-for-one into net interest income because margin compressed.
That is the key HDFC earnings bottleneck.
If loan growth stays in the mid-teens and NIM simply stabilises, NII growth can improve.
If CASA improves and expensive deposits reprice downward, margin expansion would add another earnings lever.
HDFC does not need extraordinary credit growth to create earnings acceleration.
It needs better monetisation of the balance sheet it already owns.
Asset quality remains the strongest argument against calling HDFC's weak margin a structural failure
GNPA was only 1.17% and net NPA 0.41%.
Credit cost remained around 0.40%.
This matters because banks can manufacture an attractive NIM temporarily by taking more credit risk.
HDFC has not needed to do that.
The current profitability drag primarily sits in funding and mix rather than a visible deterioration in loan quality.
HDFC still has a larger capital cushion
Total capital adequacy was approximately 19.6%, with CET1 around 17.4%.
Axis reported 16.67% total capital and 14.64% CET1.
Both are well capitalised.
HDFC simply has more capital headroom.
That supports growth, absorbs ECL transition risk and reduces the probability that growth requires near-term equity issuance.
Axis Bank's Q1 was a market-share quarter
Deposits grew 18% and advances 19%.
Those rates were above HDFC's.
Axis also expanded across several lending engines simultaneously.
- Corporate loans: +38% YoY.
- SME loans: +25% YoY.
- Retail loans: +8% YoY.
- Small Business Banking: +18% YoY.
The mix is important.
Axis is not relying exclusively on unsecured retail loans to manufacture growth.
Corporate and SME lending have become major contributors.
Axis has a better current CASA mix
Month-end CASA represented approximately 38% of deposits.
Quarterly-average CASA was about 37%.
That is materially above HDFC's 32.3% period-end ratio.
Axis nevertheless experienced the same industry-wide trend toward faster term-deposit growth.
Term deposits grew 23% on a month-end basis.
The difference is that Axis enters that deposit war from a stronger low-cost-deposit mix.
Axis NIM still fell to 3.46%
So the bank is not immune to monetary transmission.
As lending rates reprice after policy-rate changes, asset yields can fall before fixed deposits fully reprice lower.
This temporarily compresses bank margins.
Axis management has indicated it expects margin pressure to bottom around the mid-3% area.
The next two quarters therefore matter more than the absolute Q1 number.
Axis produced 23% PAT growth without requiring higher credit cost
PAT increased to ₹7,114 crore.
NII increased 8%.
Fee income increased 7%.
Core operating profit increased 10%.
Net credit cost improved sharply to 0.63% from the technical-impact-heavy base quarter.
This is a much cleaner profit bridge than a quarter driven primarily by treasury gains or provisioning reversals.
The previous year's Axis credit-cost distortion makes the PAT comparison stronger than it first appears
Q1 FY2026 contained a technical classification impact that elevated slippages and provisions.
Q1 FY2027 therefore benefits from an easier base.
But current asset quality also genuinely improved year on year.
GNPA declined from 1.57% to 1.28%.
NNPA declined from 0.45% to 0.39%.
Gross slippages declined materially.
Investors should recognise both effects rather than treating the entire 23% PAT growth as either recurring or purely base-driven.
Axis is deliberately leaning harder into corporate India
Corporate loans growing 38% year on year is not a normal mature-bank growth rate.
Recent management commentary points to demand from:
- Data centres.
- Renewable energy.
- Manufacturing.
- Urban infrastructure.
- Large NBFC borrowers.
Corporate credit has historically been more cyclical than prime mortgages.
But today's corporate balance sheets are much less leveraged than during India's previous capex boom.
The underwriting opportunity is therefore attractive if Axis remains selective.
Gold loans show how Axis is using its distribution network differently
Gold-loan growth was exceptionally strong from a small base.
Gold lending offers secured retail growth with a different risk profile from credit cards or unsecured personal loans.
It can also extend Axis deeper into smaller cities where physical branches and local relationships matter.
This is relevant because the bank now has more than 6,200 domestic branches.
Axis' subsidiaries add a second earnings layer
Domestic subsidiaries generated approximately ₹546 crore of Q1 profit, up 21%.
Axis Finance, Axis AMC, Axis Securities and Axis Capital contribute economics outside traditional spread income.
Management disclosed an approximately 41% return on investment in domestic subsidiaries during Q1.
This matters because a diversified bank can improve consolidated ROE without taking additional lending risk on the bank balance sheet.
HDFC also owns valuable subsidiaries—but the market currently focuses on the bank itself
HDFC Bank's ecosystem includes insurance, asset management, securities and consumer-finance interests, but the post-merger balance sheet is so large that liability economics dominate investor attention.
The HDB Financial Services stake sale distorted the previous-year comparison.
Q1 FY2027 other income consequently declined sharply against that unusually high base.
Adjusted for the prior-year HDB gain and exceptional provisions, underlying HDFC profit growth was closer to double digits than the headline 5% suggests.
Which bank has the better ROA?
HDFC still has the higher standalone ROA at approximately 1.85% versus Axis at 1.51%.
This is important.
Axis currently has faster growth and slightly better NIM, but HDFC still generates more profit relative to total assets.
HDFC's asset-quality advantage and fee ecosystem help offset part of the funding-margin weakness.
Axis needs its faster balance-sheet growth to translate into a durable ROA improvement rather than just larger assets.
ROE tells a different story
Axis reported standalone ROE of 14.16%, slightly ahead of HDFC's approximately 13.8% current level.
A bank can have higher ROA but lower ROE if it carries more equity capital relative to assets.
HDFC's larger CET1 cushion contributes to that difference.
This is not wasted capital, but excess capital does reduce immediate ROE.
The valuation gap has largely disappeared
Fresh late-August market data places both banks around the mid-teens trailing P/E range.
HDFC trades at roughly 14x earnings.
Axis trades around 14-15x.
Price-to-book is also approximately 1.8x for both on fresh book-value data.
That creates a much more interesting comparison than the historical period when HDFC routinely commanded a substantial premium.
At equal valuation, investors are choosing between two different earnings paths
HDFC Bank rerating path
- CASA mix improves.
- Deposit costs decline.
- NIM recovers from the current trough.
- Retail loan mix rises over time.
- ROE moves back toward historical levels.
- Leadership transition is executed cleanly.
Axis Bank rerating path
- 18%-19% balance-sheet growth remains controlled.
- Corporate credit does not create future asset-quality problems.
- NIM stabilises around the mid-3% range.
- Credit cost remains contained.
- Subsidiary earnings continue compounding.
- ROA moves structurally higher.
There is now one HDFC-specific variable that did not exist at the start of Q1
Managing Director and CEO Sashidhar Jagdishan is set to leave when his current term ends in October 2026 rather than seek another term.
That creates a succession variable at precisely the time investors want faster post-merger execution.
A new CEO does not change HDFC's deposit franchise overnight.
It can change capital allocation, organisational accountability, risk appetite and the speed at which post-merger priorities are reset.
The investment case should therefore treat leadership transition as a current execution risk rather than an abstract governance footnote.
Axis has its own risk: growth can hide underwriting mistakes for years
Corporate credit growing 38% and overall advances growing 19% look attractive today.
The economic quality of that growth will be visible only later.
Bad bank loans rarely default in the same quarter they are originated.
The right forward indicators are:
- Slippages.
- Watchlist formation.
- Restructuring.
- Sector concentration.
- Credit cost.
- Early delinquency in retail books.
Axis' current numbers are healthy.
They still need to remain healthy through the next credit cycle.
What does the stock market currently say?
| Market Metric | HDFC Bank | Axis Bank |
|---|---|---|
| Bull Run price, 25 Aug 2026 | ₹727.50 | ₹1,235 |
| Bull Run market cap | ~₹12.56 lakh Cr | ~₹4.08 lakh Cr |
| 1-month return | -2.06% | +0.63% |
| 3-month return | -4.11% | -5.30% |
| 6-month return | -19.04% | -11.50% |
| 1-year return | -25.92% | +15.42% |
| 52-week high | ₹1,020.50 | ₹1,418.30 |
| 52-week low | ₹720.39 | ₹1,042.50 |
The market has punished HDFC's slower post-merger profitability recovery far more severely.
That creates potential valuation asymmetry if margins recover.
It also means the market is demanding evidence rather than accepting the historical HDFC premium on reputation alone.
HDFC Bank vs Axis Bank: current conclusion
Axis Bank currently has the stronger operating momentum.
Deposits are growing faster.
Loans are growing faster.
CASA is higher.
NIM is slightly higher.
ROE is slightly higher.
Q1 PAT growth is materially stronger.
HDFC Bank still has the stronger scale, capital and low-credit-cost foundation.
Its biggest weakness is not loan quality. It is post-merger balance-sheet productivity.
HDFC Bank vs Axis Bank FAQs
Which bank has more deposits?
HDFC Bank, with approximately ₹31.71 lakh crore of period-end deposits versus Axis Bank at about ₹13.73 lakh crore.
Which bank is growing deposits faster?
Axis Bank in Q1 FY2027, at approximately 18% year-on-year versus HDFC Bank at 14.7%.
Which bank has the better CASA ratio?
Axis Bank. Month-end CASA was around 38%, compared with HDFC Bank at approximately 32.3%.
Which bank has the higher NIM?
Axis Bank reported 3.46%. HDFC reported approximately 3.40% on interest-earning assets and 3.26% on total assets.
Which has better asset quality?
HDFC had slightly lower gross NPA at 1.17%, while Axis had slightly lower net NPA at 0.39%. Both remain strong by large-bank standards.
Which has higher ROA?
HDFC Bank currently, at approximately 1.85% standalone versus Axis Bank at 1.51%.
Which has higher ROE?
Axis Bank slightly in Q1 FY2027, at 14.16% standalone versus HDFC around 13.8%.
Which is cheaper?
Fresh late-August valuations are surprisingly similar, with both trading around the mid-teens P/E range and roughly 1.8x book.
Where can the underlying Bull Run data be checked?
Use the HDFC Bank stock page and Axis Bank stock page for market data, financial statements, shareholding and price history.
Research sources
Disclaimer
This article is educational and informational only. Bank metrics require definition consistency. HDFC Bank discloses NIM on both total assets and interest-earning assets, while Axis reports its standard NIM measure; this article states the distinction explicitly. Gross advances, net advances, period-end deposits and quarterly-average deposits are also different measures. Bank debt-to-equity and conventional industrial free-cash-flow ratios are not useful peer metrics and are intentionally not used to rank these banks. HDFC Bank's prior-year Q1 contained material HDB Financial Services transaction effects, so headline PAT growth should not be interpreted without the base effect. Nothing here recommends buying, selling or holding HDFC Bank, Axis Bank or any security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.