HDFC Bank, India's largest private sector lender, reported a solid performance for the second quarter of fiscal year 2026, with a standalone net profit rising 10.8% year-on-year (YoY) to Rs. 18,641 crore. For investors closely watching the banking giant's post-merger trajectory, these results, which surpassed market expectations, were a significant source of comfort, driven by steady loan growth, a strong contribution from non-interest income, and a notable improvement in asset quality. The strong earnings report was well-received by the market, with the bank's shares climbing to a fresh 52-week high.
This in-depth analysis unpacks HDFC Bank's Q2 performance, what it signals about the bank's health after the mega-merger, and the outlook for investors.
Table of Contents
- HDFC Bank's Q2 Performance: The Key Numbers
- What Drove the Bank's Growth in Q2?
- The Post-Merger Story: Asset Quality and Margins
- The Investor's Bottom Line: Is a Turnaround in Sight?
- Frequently Asked Questions (FAQs)
HDFC Bank's performance was characterised by resilient core earnings and strong control over asset quality, although margins remained under slight pressure.
Financial Highlights for Q2FY26
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While the bank's Net Interest Income (NII) grew by a modest 4.8%, a significant 25% YoY jump in 'Other Income' provided a strong boost to the top line. This was driven by higher fees, commissions, and gains from trading operations, indicating a healthy diversification of revenue streams.
To evaluate how the market has interpreted HDFC Bank’s Q2 FY26 performance and price action, check the latest HDFC Bank share price, charts, and valuation ratios.
The bank continued to demonstrate robust growth in its loan book and deposit base, key indicators of its market leadership.
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Loan Growth: Gross advances grew by a healthy 9.9% YoY, with the growth being well-diversified across retail and corporate segments. Sequentially, loans grew by 4.5%.
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Deposit Growth: Total deposits saw a strong 15% YoY increase, a crucial factor in managing the bank's high loan-to-deposit ratio (LDR), which stood at 99.8%.
There’s a detailed video by NDTV Profit analysing HDFC Bank’s Q2 FY26 business update and evaluating whether the stock remains a strong long-term bet — worth watching for investors tracking the bank’s fundamentals.
A standout feature of the quarter was the significant improvement in the bank's asset quality, a key concern for investors since the merger with HDFC Ltd.
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Asset Quality: The Gross Non-Performing Assets (GNPA) ratio improved to 1.24% as of 30 September 2025, down from 1.40% in the previous quarter and 1.36% a year ago. The Net NPA ratio also improved to 0.42%.
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Net Interest Margin (NIM): This key metric, which investors have been closely watching, saw a slight sequential dip to 3.27%. Management attributed this to the faster repricing of assets compared to deposits but remains focused on improving margins by leveraging merger synergies and lowering the cost of funds.
The bank's Chief Financial Officer, S Vaidyanathan, has indicated that HDFC Bank is currently focusing on deposit mobilization and will aim to grow its loan book faster than the industry average from the next fiscal year onwards.
HDFC Bank's Q2 results have provided much-needed comfort to investors, addressing key concerns around asset quality and profitability post-merger.
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Strong Profit Growth: The 11% rise in standalone profit, beating street estimates, showcases the bank's resilient earnings power.
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Asset Quality Improvement: The decline in the GNPA ratio to 1.24% is a significant positive, suggesting that the integration of the HDFC loan book is being managed effectively.
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Positive Market Reaction: The stock hitting a 52-week high and the bullish stance from multiple brokerages reflect a positive shift in market sentiment.
For long-term investors, the results reinforce confidence in the bank's ability to navigate the complexities of the mega-merger and deliver consistent, high-quality growth.
To understand how HDFC Bank’s financials, market valuation, and merger integration have evolved over time, read the latest blog posts and analysis on HDFC Bank for detailed updates.
1. What was HDFC Bank's net profit in Q2 FY26?
HDFC Bank reported a standalone net profit of Rs. 18,641 crore, an increase of 10.8% year-on-year. The consolidated net profit was Rs. 19,611 crore.
2. How did HDFC Bank's asset quality perform?
The bank's asset quality showed significant improvement. The Gross NPA ratio improved to 1.24%, and the Net NPA ratio improved to 0.42% as of 30 September 2025.
3. What is happening with HDFC Bank's Net Interest Margin (NIM)?
The core NIM saw a slight sequential dip to 3.27%. The management is focused on improving this by lowering the cost of funds and leveraging synergies from its merger with HDFC Ltd.
4. How did the market react to HDFC Bank's Q2 results?
The market reacted positively. The bank's shares climbed to a new 52-week high following the announcement, as the results eased investor concerns about post-merger performance.
5. Is HDFC Bank a good investment after these results?
The strong profit growth, improving asset quality, and robust business momentum suggest a positive outlook. Many analysts have raised their price targets, indicating confidence in the bank's long-term growth story.