HDFC Bank Q2 Results: Profit Up 11% YoY, Asset Quality Improves
HDFC Bank's Q2 net interest income stood at Rs 31,552 crore, up 5% from Rs 30,114 crore a year ago.
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HDFC Bank reported an 11% year-on-year rise in net profit for the September quarter to Rs 18,641 crore, compared with Rs 16,821 crore a year earlier. Sequentially, profit increased 3%.
The country's largest private lender's profit rose on higher income and improved asset quality, even as other income fell and provisioning costs increased on a yearly basis.
Net interest income stood at Rs 31,552 crore, up 5% from Rs 30,114 crore a year ago. Other income rose 25% year-on-year to Rs 14,350 crore from Rs 11,483 crore.
HDFC Bank Q2 Results (Standalone, YoY)
Profit up 10.8% to Rs 18,641 crore versus Rs 16,821 crore.
Net interest income up 4.8% to Rs 31,552 crore versus Rs 30,114 crore.
Provisions up 30% to Rs 3,501 crore versus Rs 2,700 crore.
Gross NPA ratio down 16 bps to 1.24% versus 1.40% (QoQ).
Net NPA ratio down 5 bps to 0.42% versus 0.47% (QoQ).
Other income up 25% to Rs 14,350 crore versus Rs 11,483 crore
Treasury income for the country's largest private lender shot up to Rs 4,213 crore in the September quarter from Rs 744 crore a year ago, a near six-fold increase.
Other income as a whole rose 25% on the year to Rs 14,350 crore for the quarter under review. Within other income, the bank reported fees and commissions of Rs 8,840 crore, foreign exchange and derivatives revenue of Rs 1,590 crore, net trading and mark to market gain of around Rs 2,390 crore, and miscellaneous income, including recoveries and dividend of about Rs 1,530 crore.
HDFC Bank's return on assets, on a non-annualised basis, remained flat at 0.49% compared to the previous quarter's 0.48%.
Gross advances also saw a 9.9% year-on-year increase, reaching Rs 27.7 lakh crore, while total deposits jumped 12% in the same period to Rs 28 lakh crore as on Sept. 30.
The company's core net interest margin dipped eight basis points, coming down to 3.27% in the September quarter versus the previous three months' 3.35%.
HDFC Bank has also accounted a net gain of Rs 9,128 crore for the first half of fiscal 2026 on the account of its Rs 10,000 crore stake sale in HDB Financial Services Ltd.'s initial public offering.
HDB Financial is an NBFC in which the bank holds a 74.2% stake. For the quarter under review, HDB's net revenue was at Rs 2,850 crore, while profit after tax was at Rs 580 crore. The recently-listed subsidiary's total loan book was Rs 1.11 lakh crore as on Sept. 30 while stage 3 loans were at 2.81% of gross loans.
In a post-earnings media call, the lender said that while it expects its loan growth to be in line with the overall system in the current fiscal, it will grow relatively faster in fiscal 2027 and gain loan market share.
HDFC Bank's chief executive Sashidhar Jagadeesan also said that he expected to see tailwinds in net interest margin in the next two to four quarters as deposits reprice. The management also said that most asset repricing from rate cuts has played out, some amount of repricing on that front is still likely to come in.
Jagadeesan also explained that the bank doesn't expect any layoffs due to leveraging artificial intelligence. In fact, he said, what the lender will see is AI enabling the bank to free up some capacity for front-end roles from back-end jobs.