India's top private lenders, led by HDFC Bank and ICICI Bank, reported strong growth numbers in the quarter just gone by but have turned cautious on business prospects in fiscal 2027 as the West Asia war and consequent economic disruptions stoke uncertainty.
While domestic demand trends have been robust so far, war-related tensions cloud visibility on future growth and lending, especially to small and medium enterprises and export-oriented companies.
HDFC Bank’s loans grew 12% on year to ₹29.6 trillion as at the end of March 2026, whereas deposits were 14% higher at ₹31 trillion. On its post-earnings media call Saturday, managing director and CEO Sashidhar Jagdishan stated that it would be difficult to predict the future pace of growth given the war even though expansion is expected to continue.
“The trajectory is the right path in terms of positive momentum and we shall calibrate that as we get more clarity from the macro indicators over a period of time,” Jagdishan said, adding that so far the impact from the geo-political situation has been minimal.
Temporary stress seen in Q1
Jagdishan said bank clients have seen a certain level of disruption but what is really encouraging is their resilience. Some MSME segments, said Jagdishan, may face challenges and temporary stress however, but most of the impact should “play out in the first quarter”.
A ceasefire between US and Iran has rekindled hopes among investors of an end to a conflict that started late February. Still, uncertainties persist around the opening of the Strait of Hormuz, a narrow conduit through which about one-fifth of global oil supply passes.
Experts have cautioned that supply chain disruption on account of the war will have an impact on several sectors.
In a note dated 18 April, SBI Research said that the West Asia war has created “multiple vortexes of headwinds” across its second and third tier impacts across agriculture to MSMEs to consumption patterns and has “fed ample rigidity” in global supply/value chains. However, it pointed to green shoots such as GIFT City becoming a destination for investors who want an alternative to Dubai or Abu Dhabi or India developing transit hub airports for international aviation.
Cautious optimism at ICICI
At India's second largest private lender ICICI Bank, the management too was cautious but more optimistic on domestic credit growth. In the Q4 media earnings call, executive director Sandeep Batra said that the bank so far has not seen any impact on its books.
“It is very difficult to say how things will evolve from here, as it will depend on liquidity, competitive intensity, deposit rates and geopolitics,” he said, adding that the extent of the potential fallout from the war will depend on how long the situation persists.
“Will there be a bit of an impact on the GDP growth in FY27? The answer is yes, but it is still going to be growing and within that, there will be enough opportunities for both corporate India and for us to grow,” Batra said. As such, the bank will continue to carefully “monitor all these indicators” such as stress in the SME segment. He added that it is “safe to assume there will be some kind of economic impact”.
ICICI Bank’s loans grew 15.8% on year to Rs15.5 trillion in the reporting quarter whereas total deposits grew 11.4% to Rs17.9 trillion.
Growth outlook constructive
“The management commentary pointed to a constructive outlook, supported by a stable rate environment but tempered by external uncertainties,” Bernstein Research said in a post-earnings note, noting that ICICI Bank expects growth momentum to be supported by a stable rate environment and a “broadly positive” macro backdrop.
Yes Bank, which also reported its Q4 earnings on Saturday, said that it has undertaken a specific “impact study” with regard to the West Asia disruptions as per there is no specific impact on the bank’s customers so far.
On its earnings call, executive director Manish Jain said the bank is watching its portfolio and war impact “very, very closely”.
“Our clients whether larger size or MSME have been operating well but, of course, we are mindful of the fact that the war can have a little longer term impact during the year in terms of rising inflation and hence there may be second order impact on a larger portfolio,” Jain said.