Indian private-sector banks fall in Asia-Pacific Q1 market cap rankings

India's private sector lenders slipped in the rankings of the top 20 banks in Asia-Pacific by market capitalization in the first quarter of 2026, as global uncertainties pressured valuations.

The country's largest lender, HDFC Bank Ltd., fell three positions to seventh place, losing over 26% of its market capitalization, according to S&P Global Market Intelligence data. ICICI Bank Ltd., previously the second-largest Indian bank, lost about 10% of its market valuation during the same period. Several brokerages said Indian bank stocks were caught in the crossfire of the Middle East conflict, despite limited direct exposure to oil-linked disruptions.

"After a strong rally, the banking sector has been reeling under pressure of late due to the potential impact of the Middle East crisis on the economy, inflation and the otherwise fragile banking sector recovery," Emkay Global analysts said in an April 9 note. "However, we believe that if the ceasefire holds and the supply chain gets restored, the impact could be limited and the banking sector recovery may get back on track."

Oversold

Indian banks began the quarter on a strong footing, supported by double-digit credit growth and near-decade lows in nonperforming assets. Bank credit grew 13.8% year over year as of March 15, compared with 11% a year earlier, according to central bank data, aided by a cumulative 125-basis-point rate cut since 2025 and an increase in demand from tax relief measures.

The Nifty Bank index, which tracks 12 major Indian banking stocks, was on a steady upward trajectory before falling more than 17% between the start of the Middle East conflict on Feb. 26 and the end of the quarter. The index has since regained some ground following news of a two-week ceasefire.

Analysts said Indian banks bore the brunt of macroeconomic concerns, including a potential uptick in inflation and a slowdown in GDP growth. The lenders' underlying fundamentals remain strong and are expected to see limited direct fallout from the crisis.

"The Middle East conflict may impact the micro, small and medium-sized enterprises' exposure for a while and banks with direct exposure to the Middle East (either for loans/deposits)," said Abhishek Murarka, an equity analyst at HSBC Securities & Capital Markets (India), in a March 20 note, adding that any impact could take time to reflect in reported numbers. "At this time, we are not seeing any explicit impact on corporate exposures."

HDFC resignation

HDFC Bank’s stock was further weighed by the resignation of its part-time chairman, Atanu Chakraborty, on March 18, before the end of his term. In his resignation letter, he cited "certain happenings and practices within the bank, that I have observed over the last two years, are not in congruence with my personal values and ethics."

ICICI Securities analyst Jai Mundhra described the development as "serious and a bit difficult to comprehend."

HDFC Bank said in a statement that it has established governance frameworks and "continues to remain committed to maintaining high standards of compliance and regulatory adherence."

The Reserve Bank of India approved the appointment of a new part-time chairman, stating that it found "no material concerns on record as regards [the bank's] conduct or governance." The bank has since taken remedial steps, including changes at the senior management level.

Downside risks to the stock appear limited after trading at historically low valuations in March. "In the near term, we expect the bank to deliver higher-than-system deposit growth and loan growth in line with the system, which should support a re-rating," Mundhra said.

– Read more Asia-Pacific data dispatches here. – Access all indices including Asia-Pacific indices. – Read about Top 20 Indian banks by market cap

Other markets

Chinese megabanks retained their dominance, occupying the top four positions, with each reporting a market capitalization exceeding $250 billion. Industrial and Commercial Bank of China Ltd., the region's largest bank by market cap, improved its valuation by 0.4% over the quarter to $374.58 billion.

Among Japanese lenders, Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. posted single-digit growth in market capitalization during the quarter. The gains were supported by a rising interest rate environment following the Bank of Japan's rate hike to a 30-year high of 0.75% in December 2025.

Australian banks — Commonwealth Bank of Australia, Westpac Banking Corp. and National Australia Bank Ltd. — also climbed in the rankings. This followed a gradual tightening cycle by the central bank, with rate hikes in February and March aimed at curbing elevated inflation amid a tight labor market.