HDFC Bank Q2 profit rises 4.7 per cent to Rs 19,510 crore as net interest income grows

MUMBAI: HDFC Bank’s second-quarter profit grew 4.7 per cent year on year, but the sharper story lay beneath the headline number, with net interest income rising 9.7 per cent, deposits expanding 18.8 per cent and asset quality improving. India’s largest private sector lender reported a standalone net profit of Rs 19,509.96 crore for the quarter ended 30 September 2026, against Rs 18,641.28 crore in the corresponding quarter last year.

The bank’s board approved the unaudited standalone and consolidated financial results for the quarter and half-year ended 30 September at its meeting on 17 October.

Standalone profit before tax rose to Rs 25,909.80 crore from Rs 24,423.07 crore a year earlier. The bank also reported that profit after tax growth would have been 12.6 per cent after excluding treasury trading gains, which declined sharply during the quarter.

Net interest income (NII), the difference between interest earned and interest expended, increased to Rs 34,619.18 crore from Rs 31,551.50 crore in the year-ago quarter. Total interest earned stood at Rs 83,426.60 crore, while interest expended amounted to Rs 48,807.42 crore.

Net interest margin stood at 3.16 per cent of total assets and 3.32 per cent of interest-earning assets.

Total standalone net revenue increased to Rs 48,450.20 crore from Rs 45,900.68 crore in the corresponding quarter of the previous financial year. Other non-interest income contributed Rs 13,831.02 crore.

Fees and commissions rose to Rs 9,690 crore from Rs 8,840 crore, while foreign exchange and derivatives income stood at Rs 1,550 crore against Rs 1,590 crore. Treasury trading gains fell to Rs 780 crore from Rs 2,390 crore. Miscellaneous income, including recoveries and dividends, increased to Rs 1,810 crore from Rs 1,530 crore.

Operating expenses totalled Rs 18,966.78 crore, comprising employee costs of Rs 6,774.17 crore and other operating expenses of Rs 12,192.61 crore. The cost-to-income ratio stood at 39.1 per cent.

Provisions and contingencies amounted to Rs 3,573.62 crore, while the total credit cost ratio was 0.44 per cent. Basic earnings per share increased to Rs 12.66 from Rs 12.14 a year earlier, with diluted earnings per share at Rs 12.63.

For the first half of FY27, standalone total income reached Rs 1,89,442 crore, while net profit rose 4.8 per cent to Rs 38,569.68 crore from Rs 36,796.49 crore in the corresponding period of FY26. Total net revenue for the six months stood at Rs 94,809.75 crore.

On a consolidated basis, which includes the bank’s subsidiaries, quarterly net revenue reached Rs 78,690 crore. Consolidated profit after tax before minority interest stood at Rs 21,537.09 crore. After accounting for minority interest of Rs 837.06 crore, net profit was Rs 20,700.03 crore.

Consolidated profit after tax for the first half was Rs 39,944.74 crore. The group’s total consolidated assets stood at approximately Rs 51.66 lakh crore.

The bank’s standalone balance sheet expanded to Rs 45.78 lakh crore as of 30 September 2026, compared with Rs 40.03 lakh crore a year earlier.

End-of-period deposits rose 18.8 per cent year on year to Rs 33.27 lakh crore. Average deposits during the quarter increased 16.8 per cent to Rs 31.66 lakh crore.

Savings account deposits stood at Rs 7.16 lakh crore, while current account deposits reached Rs 3.36 lakh crore. Time deposits increased 22.8 per cent to Rs 22.76 lakh crore. Current and savings account deposits together accounted for 31.6 per cent of the deposit base.

Gross advances grew 16.3 per cent to Rs 32.20 lakh crore. Average advances under management increased 14.1 per cent to Rs 31.87 lakh crore.

Commercial and small and medium enterprise loans led growth among the reported lending segments, rising 23.5 per cent year on year. Wholesale corporate loans expanded 16.4 per cent, while retail loans grew 11.7 per cent. Overseas advances accounted for 3.3 per cent of total loans.

The bank’s capital adequacy ratio under Basel III stood at 18.87 per cent, comfortably above the stated regulatory minimum of 11.9 per cent. Tier-I capital adequacy was 17.2 per cent and the common equity Tier-I ratio stood at 17.1 per cent. Risk-weighted assets totalled Rs 31.79 lakh crore.

Asset quality strengthened during the quarter, with gross non-performing assets (GNPAs) declining to 1.11 per cent of gross advances from 1.17 per cent in June 2026 and 1.24 per cent in September 2025.

Gross NPAs amounted to Rs 35,809.70 crore. Excluding agricultural NPAs, the gross bad-loan ratio was 0.87 per cent. Net non-performing assets stood at Rs 11,850.86 crore, or 0.37 per cent of net advances.

The improvement offers a counterpoint to the relatively modest headline profit growth, indicating that the bank continued to strengthen its reported asset quality even as treasury income came under pressure.

HDFC Bank’s distribution network comprised 9,706 branches and 20,881 ATMs across 4,177 cities and towns. More than half of its branches were located in semi-urban and rural areas, supported by 14,365 business correspondents. The bank’s employee headcount stood at 2,10,109.

Its subsidiaries also contributed to group earnings during the quarter.

HDB Financial Services, in which HDFC Bank held a 74.1 per cent stake, reported net revenue of Rs 3,190 crore and net profit of Rs 780 crore, up 34.2 per cent year on year. Its first-half profit reached Rs 1,570 crore, while its loan book stood at Rs 1.25 lakh crore. Stage-3 assets were 2.43 per cent and its capital adequacy ratio was 21.4 per cent.

HDFC Life Insurance, in which the bank held a 50.5 per cent stake, reported quarterly profit of Rs 510 crore, up 13.6 per cent, and first-half profit of Rs 1,120 crore. HDFC ERGO General Insurance posted quarterly profit of Rs 160 crore and half-year profit of Rs 380 crore.

HDFC Asset Management Company reported quarterly average assets under management of Rs 9.69 lakh crore and second-quarter profit of Rs 750 crore. Its first-half profit stood at Rs 1,590 crore.

HDFC Securities, in which the bank held a 93.9 per cent stake, recorded quarterly revenue of Rs 960 crore and net profit of Rs 270 crore, up 26.1 per cent year on year. Its first-half profit reached Rs 560 crore.

During the first half of FY27, the bank allotted 2.52 crore equity shares under employee stock option schemes, including 1.73 crore shares during the second quarter.

Restructured loan exposures under the COVID-19 stress frameworks declined to Rs 1,952.45 crore. The bank also assigned non-default loans worth Rs 4,960.74 crore while retaining a 10 per cent beneficial interest. Outstanding security receipts stood at Rs 1,046 crore.

The restriction imposed by the Dubai Financial Services Authority on the bank’s Dubai International Financial Centre branch regarding the solicitation of new clients remained in place. The bank stated that the restriction had no material impact on its overall financial position.

HDFC Bank’s latest results present a mixed but broadly resilient picture: earnings growth was restrained by the sharp decline in treasury trading gains, while core interest income, deposit mobilisation, loan growth and asset quality remained supportive. The next test will be sustaining profitability and margins while converting balance-sheet expansion into earnings growth.