HDFC Bank profit rose 4.7% year over year to ₹19,510 crore on a standalone basis in the quarter ended September 30, 2026. Higher net interest income supported the increase, but weaker treasury trading gains and a larger tax bill limited earnings growth despite expanding loans and deposits.
Key Takeaways
- Net interest income rose 10%, but lower trading gains pulled other income down 4%.
- Net interest margin narrowed to 3.16%; management said recovery would take a couple more quarters.
- Deposits grew faster than advances, while both gross and net bad-loan ratios improved.
Table of Contents
- HDFC Bank profit growth trails interest income
- Margin narrows despite balance-sheet expansion
- Bad-loan ratios improve as lending grows
- Conclusion
HDFC Bank profit growth trails interest income
The bank’s Q2FY27 results materials, published on October 17, cover the quarter and half year ended September 30, 2026. The standalone quarterly profit increased from ₹18,641 crore a year earlier; these figures measure the bank itself rather than its consolidated group.
Net interest income—the difference between interest earned and interest paid—rose to ₹34,619 crore from ₹31,551.50 crore. Other income moved in the opposite direction, falling to ₹13,831 crore from ₹14,350 crore.
The main drag on other income was treasury trading gains, which dropped to ₹780 crore from ₹2,390 crore. Higher tax expense also restrained bottom-line growth, while provisions increased more modestly.
| Item | Details |
|---|---|
| Provisions | ₹3,574 crore in Q2FY27 versus ₹3,501 crore a year earlier; up 2%. |
| Tax expense | ₹6,400 crore versus ₹5,782 crore; up 11% year over year. |
| Retail loans | Up 12% year over year at September-end 2026. |
| Small and mid-market enterprise loans | Up 23% year over year at September-end 2026. |
| Corporate and other wholesale advances | Up 16% year over year at September-end 2026. |
Margin narrows despite balance-sheet expansion
Net interest margin declined to 3.16% from 3.27% a year earlier, a reduction of 11 basis points. The combination of higher net interest income and a narrower margin shows that income growth did not translate into a higher margin.
Chief financial officer Srinivasan Vaidyanathan said constraints and choices made over the previous two quarters had left the margin slightly below management’s expectations. He said it would take a couple more quarters to recover, an outlook rather than a completed improvement.
Deposits reached ₹33,27,449 crore at September-end, up 19% year over year, compared with 16% growth in advances to ₹32,19,500 crore. However, low-cost current-account and savings-account deposits fell to 31.6% of total deposits from 33.9%, indicating a shift in the funding mix.
Bad-loan ratios improve as lending grows
Gross non-performing assets declined to 1.11% of gross advances at September 30, 2026, from 1.24% a year earlier. Net non-performing assets fell to 0.37% of net advances from 0.42%.
Those lower ratios accompanied growth across the reported lending categories. Small and mid-market enterprise loans expanded faster than retail loans and corporate and other wholesale advances.
Conclusion
The next quarterly results will provide a check on management’s expected margin recovery and whether stronger deposit and loan volumes can deliver faster profit growth.
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