HDFC Bank, Axis Bank Fall Nearly 5% as Net Interest Margins Shrink

According to CNBC, shares of HDFC Bank and Axis Bank fell nearly 5% on Monday after concerns mounted over weaker net interest margins. HDFC Bank's net interest margin contracted 13 basis points sequentially to 3.4% from 3.53% in the previous quarter, while Axis Bank's margin compressed 16 basis points to 3.46% in April-June. Citigroup said NIM compression and softer fees added to earnings headwinds and that margins will remain a key monitorable. The brokerage also said loan momentum at HDFC Bank improved, led mainly by demand from the commercial and corporate sector, while retail loan traction remained underwhelming. Axis Bank's sharp margin compression was mostly due to loan repricing, according to Motilal Oswal. The brokerage said Axis also saw better loan growth driven by corporate demand, while the retail segment remained muted, and it cut earnings estimates for the bank for the current financial year ending March 2027 and the next by 2%.