HDFC Bank and Axis Bank slid nearly 5% as investors focused on weaker net interest margins, with analysts also pointing to softer retail loan demand despite stronger corporate lending.
HDFC Bank and Axis Bank shares fell nearly 5% on Monday as investors reacted to weaker net interest margins in their April-June results. 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 compressed 16 basis points to 3.46%. Analysts said the margin pressure, along with softer fees in HDFC Bank's case, is likely to remain a key monitorable even as loan growth improved, driven mainly by commercial and corporate demand. Retail loan traction remained weak at both lenders. HDFC Bank shares have also been under pressure since March after part-time chairman Atanu Chakraborty resigned citing governance and ethical concerns, though the bank said in June that an independent legal review found no evidence to substantiate those claims. Motilal Oswal cut its earnings estimates for Axis Bank by 2% for the current financial year ending March 2027 and the next.