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Indian banks put up a strong performance in the second quarter, with the majority of them reporting credit growth as part of their operational updates.

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HDFC Bank posted robust growth in Q2 FY26, with average deposits rising 15.1% to ₹27.15 lakh crore and advances growing 9% to ₹27.95 lakh crore. The bank’s CASA deposits increased 8.5% to ₹8,770 billion, reflecting continued retail traction.

Kotak Mahindra Bank saw a 15.8% rise in advances to ₹4.62 lakh crore, while deposits grew 14.6% to ₹5.28 lakh crore, driven by strong demand from both retail and corporate sectors.

IDBI Bank reported 15% loan growth to ₹2.3 lakh crore, with deposits up 9% to ₹3.03 lakh crore, and total business rising 12% to ₹5.33 lakh crore. State-run UCO Bank recorded a 13.3% increase in total business to ₹5.37 lakh crore, with advances up 16.7% and deposits rising 10.9%.

Other lenders, including Punjab National Bank, raised their credit growth forecast to 11–12%. Meanwhile, Bank of Baroda’s global business grew 10.5% to ₹27.79 trillion, with deposits at ₹15 trillion. AU Small Finance Bank stood out with a 20.8% rise in deposits and 22.4% growth in advances.

Not all updates were positive: IndusInd Bank reported sequential declines in deposits and advances, alongside a lower CASA ratio, which raised investor concerns despite the appointment of a new CFO.

Analyst Take: Could Banks Be the Dark Horse In Q2 Earnings?

For months, banks lagged behind the rally, but there are signs of a volume revival as loan books are expanding again, noted SEBI-registered Front Wave Research.

Technically, ICICI Bank and HDFC Bank are currently testing their long-term support levels, suggesting potential buying interest near key zones, the analyst said.

RBL Bank is consolidating in a critical range, with strong fundamentals poised to drive a breakout. Valuations highlight opportunity. The sector’s median P/B is 1.35x, while RBL trades at a discounted 1.07x.

With credit growth guidance improving this quarter, conditions are shaping up for banks to reclaim leadership in the market, they added.

Stock Watch

The Nifty Bank index was among the top sectoral gainers on Monday. AU Small Finance Bank, IDFC First Bank, Kotak Mahindra Bank, and Axis Bank were all trading above 2%. Kotak Mahindra was among the top trending stocks on Stocktwits.