HDFC Bank Ltd. is expected to report a 5.8% year-on-year increase in standalone profit for the September quarter, with net interest income rising nearly 11%, according to Bloomberg estimates. Net interest margin is projected to remain unchanged at 3.27%, while provisions are expected to decline, leaving loan growth, deposit mobilisation and the impact of foreign currency non-resident (FCNR) deposits on margins among the key variables shaping the quarter. The lender is set to report quarterly results on Saturday.
The estimates point to a modest improvement in profitability, supported by stronger interest income and lower provisions. However, the outlook for margins remains divided. Nomura expects net interest margin to stabilise, with the drag from FCNR(B)-linked deposits becoming immaterial, while Motilal Oswal and Investec anticipate further quarter-on-quarter pressure. Loan growth estimates also vary, reflecting differing expectations for advances and the contribution from the overseas book.
HDFC Bank Q2 Preview (Standalone, YoY) (Bloomberg Estimates)
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- Net interest income seen 10.9% higher at Rs 34991.51 crore versus Rs 31550 crore
- Net interest margin seen at 3.27% versus 3.27% (3.26%)
- Profit seen 5.8% higher at Rs 19727.43 crore versus Rs 18641.28 crore
- Provisions seen 4.5% lower at Rs 3342.62 crore versus Rs 3500 crore
- Gross NPA seen at 1.14% versus 1.17% (QoQ)
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The central question for HDFC Bank this quarter is whether loan growth can strengthen without further deterioration in margins. FCNR(B) deposit mobilisation, the composition of incremental lending and the pace of deposit growth will influence that balance. Analysts also expect asset quality to remain stable, with credit costs largely unchanged. The bank's ability to improve lending momentum while containing funding costs and preserving margins will be important in assessing its earnings trajectory.
Here's what analysts expect from HDFC Bank Q2 results
Nomura
Expects loans to rise 5% quarter-on-quarter, or 3.4% excluding FCNR(B)-linked loans.
Sees net interest margin easing by just 2 basis points sequentially, with the impact of FCNR(B) deposits becoming negligible.
Projects net interest income growth of 3% quarter-on-quarter.
Expects asset quality to remain stable across segments, with credit costs at around 40 basis points.
Citi
Expects FCNR(B) deposits to account for 3.5–4.5% of deposits.
Sees margins stabilising as the impact of FCNR(B) deposits becomes immaterial, supporting net interest income growth of more than 2% quarter-on-quarter.
Projects loan growth of more than 5% sequentially, translating into 16.5% year-on-year growth, although this would remain below the banking system's growth of more than 18%.
Expects domestic advances to be driven by business banking, corporate lending and small and medium enterprises, with the overseas book also supporting loan growth.
Sees deposit growth broadly tracking the system, despite a lower FCNR share.
Expects operating costs to rise in the mid-single digits, with operating leverage helping improve efficiency as newer branches mature and AI- and analytics-led initiatives deliver gains.
Anticipates stable asset quality across unsecured retail, SME, emerging corporate and commercial real estate exposures, with credit costs at around 0.4%.
Motilal Oswal
Expects loans to grow 2.3% quarter-on-quarter and 14.9% year-on-year, led by business banking, corporate and agricultural lending. Mortgage growth may lag.
Projects deposit growth of 5.5% sequentially and 19.4% annually, supported by FCNR(B) inflows.
Sees net interest margin contracting by 8 basis points quarter-on-quarter.
Expects cost ratios to remain contained as operating leverage benefits build.
Anticipates stable asset quality, with credit costs of 45–50 basis points.
Investec
Notes that loan growth excluding FCNR(B)-linked lending was around 14% year-on-year, while total deposit growth was around 19%.
Expects net interest margin to decline sequentially as FCNR(B)-related changes in the loan mix and higher liquidity weigh on the metric.
Sees asset quality remaining healthy, with credit costs broadly stable quarter-on-quarter.
Bank of America
Identifies a faster recovery in loan growth, stronger performance in the bank's lending segments and better-than-expected retail asset quality as potential upside factors.
Says further market-share gains could also support performance.
Flags a slower loan recovery amid macroeconomic headwinds as a downside risk.
Warns that aggressive RBI rate cuts and measures to accelerate rate transmission could put additional pressure on net interest margins.
Cites the absence of meaningful government support for economic growth or measures to contain non-performing asset risks in specific sectors as another potential headwind.
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