HDFC Bank reported a 4.7% year-on-year (YoY) increase in standalone net profit to ₹19,510 crore in Q2 FY27, compared with ₹18,641 crore a year earlier. Net interest income (NII) rose 9.7% to ₹34,619 crore, while deposit growth remained strong and asset quality improved. However, lower treasury trading gains and margin compression limited overall profit growth.
The HDFC Bank Q2 FY27 Results Analysis shows that profit excluding treasury trading gains increased 12.6%, reflecting stronger underlying earnings than the headline figures suggest. With gross NPAs declining to 1.11% and capital adequacy at 18.9%, the bank maintained a healthy balance sheet, although funding costs and declining CASA deposits remain important areas to monitor.
Table of Contents
- HDFC Bank Q2 FY27 Results at a Glance
- HDFC Bank Q2 FY27 Financial Performance
- Why Did HDFC Bank's Profit Grow Only 4.7%?
- Net Interest Margin and Core Profitability
- HDFC Bank Deposit Growth and CASA Ratio
- Loan Growth and Business Segment Performance
- HDFC Bank Asset Quality and NPA Trends
- Capital Adequacy and Liquidity Position
- HDFC Bank Subsidiary Performance
- HDFC Bank Share Price Reaction and Analyst Views
- What Should Investors Monitor Next?
- HDFC Bank Q2 FY27 Results: Key Takeaways
HDFC Bank announced its financial results for the quarter ended 30 September 2026 on 17 October 2026. The standalone financial statements were prepared under Indian GAAP and underwent a limited review by statutory auditors.
The HDFC Bank Q2 FY27 Report highlights growth in interest income, deposits and advances, alongside lower treasury revenue and a decline in net interest margin.
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Key metric
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Q2 FY27 performance
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Standalone net profit
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₹19,510 crore, up 4.7% YoY
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Net interest income
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₹34,619 crore, up 9.7% YoY
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Net revenue
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₹48,450 crore, up 5.6% YoY
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Other income
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₹13,830 crore, down 3.6% YoY
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Operating expenses
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₹18,970 crore, up 5.5% YoY
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Profit before tax
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₹25,910 crore, up 6.1% YoY
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PAT excluding treasury gains
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₹18,930 crore, up 12.6% YoY
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Net interest margin
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3.16% on total assets
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Gross NPA ratio
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1.11%
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Capital adequacy ratio
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18.9%
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Earnings per share
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₹12.7
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The difference between reported and underlying profit growth is particularly important. While standalone PAT increased 4.7%, profit excluding treasury trading gains grew 12.6%.
This suggests that the bank's core earnings performance was stronger than its reported profit growth.
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To assess HDFC Bank’s stock performance alongside its Q2 FY27 earnings, review the HDFC Bank share price, historical charts and key valuation ratios.
HDFC Bank's Q2 earnings for FY27 reflected steady growth in interest income and controlled operating expenses. However, the decline in non-interest income restricted overall revenue growth.
Revenue and Profit Comparison
The tables below compare HDFC Bank's key financial indicators for Q2 FY27 and Q2 FY26.
Q2 FY27 Financial Performance
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Particulars
|
Q2 FY27
|
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Net interest income
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₹34,619 cr
|
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Other income
|
₹13,830 cr
|
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Net revenue
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₹48,450 cr
|
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Operating expenses
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₹18,970 cr
|
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Provisions and contingencies
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₹3,570 cr
|
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Profit before tax
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₹25,910 cr
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Standalone net profit
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₹19,510 cr
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PAT excluding treasury gains
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₹18,930 cr
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Earnings per share
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₹12.7
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Q2 FY26 Financial Performance
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Particulars
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Q2 FY26
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Net interest income
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₹31,550 cr
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Other income
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₹14,350 cr
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Net revenue
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₹45,900 cr
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Operating expenses
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₹17,980 cr
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Provisions and contingencies
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₹3,500 cr
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Profit before tax
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₹24,420 cr
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Standalone net profit
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₹18,641 cr
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PAT excluding treasury gains
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₹16,810 cr
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Earnings per share
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₹12.1
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Figures rounded as reported. Source: HDFC Bank Q2 FY27 financial results, based on the supplied data.
Net interest income increased by ₹3,069 crore YoY, supported by growth in the bank's lending business.
Operating expenses rose 5.5%, broadly in line with net revenue growth of 5.6%. Consequently, the bank maintained a cost-to-income ratio of 39.1%.
Provisions increased marginally by 2.1% to ₹3,570 crore, while profit before tax grew 6.1%.
Despite these improvements, standalone net profit increased at a slower pace because non-interest income declined during the quarter.
The primary reason for the relatively modest growth in HDFC Bank Q2 FY27 net profit was a sharp decline in treasury trading gains.
Treasury income can fluctuate depending on market conditions and trading performance. As a result, changes in treasury gains can affect reported earnings even when the core banking business continues to grow.
Treasury Trading Gains Declined 67%
The tables below compare HDFC Bank's other income in Q2 FY27 and Q2 FY26, highlighting the decline in treasury trading gains and changes in other income sources.
Treasury Trading Gains in Q2 FY27
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Particulars
|
Q2 FY27
|
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Treasury trading gains
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₹780 cr
|
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Fees and commissions
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₹9,690 cr
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Foreign exchange and derivatives
|
₹1,550 cr
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Miscellaneous income
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₹1,810 cr
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Total other income
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₹13,830 cr
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Treasury Trading Gains in Q2 FY26
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Particulars
|
Q2 FY26
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Treasury trading gains
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₹2,390 cr
|
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Fees and commissions
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Approx. ₹8,841 cr
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Foreign exchange and derivatives
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Broadly unchanged
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Miscellaneous income
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₹1,530 cr
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Total other income
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₹14,350 cr
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Treasury trading gains declined by ₹1,610 crore, or approximately 67% YoY.
Meanwhile, fees and commissions increased 9.6% to ₹9,690 crore, indicating continued growth in fee-generating banking activities.
Miscellaneous income also improved, rising to ₹1,810 crore from ₹1,530 crore.
However, these increases were insufficient to offset the decline in treasury gains, resulting in a 3.6% fall in total other income.
Core Profit Growth Was Stronger
Excluding treasury trading gains, HDFC Bank's profit after tax increased from ₹16,810 crore to ₹18,930 crore, representing growth of 12.6%.
This distinction matters because treasury trading gains are more volatile than recurring income from lending and banking services.
For investors assessing earnings sustainability, tracking both reported PAT and PAT excluding treasury gains provides a clearer picture of underlying profitability.
HDFC Bank's profitability indicators remained healthy in Q2 FY27, although net interest margin declined compared with the previous year and preceding quarter.
Net interest margin measures the difference between interest earned and interest paid, relative to the relevant asset base. It is an important indicator of a bank's lending profitability.
HDFC Bank Q2 FY27 Profitability Ratios
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Metric
|
Q2 FY27
|
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NIM on total assets
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3.16%
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NIM on interest-earning assets
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3.32%
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Return on assets (ROA)
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1.78%
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Return on equity (ROE)
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13.5%
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Credit cost ratio
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0.44%
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Cost-to-income ratio
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39.1%
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Quarterly EPS
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₹12.7
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Why Did HDFC Bank's NIM Decline?
Net interest margin declined to 3.16% in Q2 FY27 from approximately 3.3% in both Q2 FY26 and Q1 FY27.
The decline was linked to changes in asset yields and funding costs.
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Yield on assets: Declined to 7.6% from 7.8% a year earlier.
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Cost of funds: Eased to 4.4%, partially offsetting the reduction in asset yields.
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Deposit composition: Faster growth in time deposits compared with CASA deposits continued to influence funding costs.
Although funding costs moderated, the reduction was insufficient to prevent margin compression.
For investors, the key question is whether deposit repricing and changes in the lending mix can support NIM stabilisation over subsequent quarters.
Deposit mobilisation remained one of the strongest aspects of HDFC Bank's Q2 FY27 results.
The bank continued expanding its deposit base as part of its post-merger strategy to strengthen funding and support balance-sheet growth.
Deposit Growth in Q2 FY27
HDFC Bank's period-end deposits rose 18.8% YoY to ₹33,274 billion (₹33.27 lakh crore).
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Deposit metric
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September 2026/YoY growth
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Average deposits
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₹31,664 bn / +16.8%
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Period-end deposits
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₹33,274 bn / +18.8%
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Average CASA deposits
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₹9,712 bn / +10.7%
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Period-end time deposits
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₹22,755 bn / +22.8%
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On a quarter-on-quarter basis, average deposits increased 5.1%, while period-end deposits rose 4.9%.
Average CASA deposits grew 1.5% sequentially, whereas time deposits increased 6.1%.
These figures indicate that deposit growth remained strong, with term deposits contributing significantly to the expansion.
CASA Ratio Declined Despite Deposit Growth
HDFC Bank's period-end CASA deposits stood at ₹10,519 billion, accounting for 31.6% of total deposits.
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The decline reflects faster growth in time deposits relative to current and savings account balances.
CASA deposits are generally a lower-cost funding source for banks. A falling CASA ratio can therefore limit the benefit of overall deposit growth.
For HDFC Bank, strong deposit mobilisation supports lending capacity and liquidity, but a sustained improvement in the CASA mix would be important for future margin expansion.
HDFC Bank recorded double-digit growth in advances during Q2 FY27, supported by retail, small and mid-market enterprises, and wholesale lending.
Gross advances increased 16.3% YoY to ₹32,195 billion, while advances under management grew 15.3% to ₹33,074 billion.
Average advances under management increased 14.1% YoY to ₹31,872 billion.
HDFC Bank Loan Portfolio Breakdown
The bank's lending portfolio expanded across its major business segments.
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Loan segment
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September 2026 AUM / YoY growth
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Retail loans
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₹17,378 bn / +11.7%
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Small and mid-market enterprises
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₹7,061 bn / +11.7%
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Corporate and other wholesale
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₹8,635 bn / +16.4%
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Gross advances
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₹32,195 bn / +16.3%
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The first three figures represent segment-level AUM, while gross advances is a separate reported balance-sheet measure.
Small and mid-market enterprises recorded the fastest growth among the major lending segments, increasing 23.5% YoY.
Retail loans increased 11.7%, while corporate and other wholesale lending grew 16.4%.
Retail Lending and Mortgage Growth
Within the retail portfolio, growth differed across lending categories.
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Mortgages: Increased 7.5% YoY to ₹9,205 billion.
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Non-mortgage retail loans: Grew 16.9% YoY to ₹8,173 billion.
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Business banking: Expanded 28.1% YoY to ₹5,259 billion.
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Retail loans excluding FCNR leverage loans: Grew 9.1% YoY, after excluding ₹548 billion of FCNR leverage loans.
The difference between reported retail growth of 11.7% and adjusted growth of 9.1% is relevant when assessing underlying loan demand.
Business banking emerged as an important growth contributor, supporting the bank's focus on secured and SME lending.
However, faster growth in these segments also makes credit quality and future slippages important indicators to monitor.
HDFC Bank's asset quality improved during Q2 FY27, with both gross and net non-performing asset ratios declining sequentially.
The improvement indicates that stressed assets made up a smaller share of the bank's loan portfolio.
Gross NPA and Net NPA Comparison
| Asset-quality metric |
September 2026 / June 2026 |
| Gross NPA ratio |
1.11% / 1.17% |
| GNPA excluding agriculture |
0.87% / 0.91% |
| Net NPA ratio |
0.37% / 0.41% |
The gross NPA ratio also improved from 1.24% in September 2025 to 1.11% in September 2026.
Similarly, GNPA excluding agriculture declined from 0.99% a year earlier to 0.87%.
These trends indicate an improvement in reported asset quality on both sequential and annual comparisons.
Slippages, Recoveries and Provision Coverage
Gross NPAs declined from ₹358 billion in June 2026 to ₹341 billion in September 2026.
The bank reported slippages of ₹61 billion during the quarter, while upgrades, recoveries and write-offs contributed to the reduction in outstanding stressed assets.
Other important asset-quality indicators included:
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Specific provision coverage ratio: 67%.
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Total credit cost: 44 basis points.
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Credit cost net of recoveries: 32 basis points.
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Stock of provisions: ₹735 billion.
The provision stock provides a buffer against potential credit losses.
However, lower NPA ratios do not eliminate future credit risk. Investors should continue tracking slippages and credit costs, particularly as SME and retail lending expand.
HDFC Bank maintained capital and liquidity ratios above regulatory requirements during Q2 FY27.
Strong capitalisation supports the bank's ability to expand its loan portfolio while maintaining protection against potential losses.
HDFC Bank Capital and Liquidity Ratios
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Metric
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September 2026
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Capital adequacy ratio (CAR)
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18.9%
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Regulatory capital requirement
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11.9%
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Tier 1 capital ratio
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17.2%
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CET1 ratio
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17.1%
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Average liquidity coverage ratio
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113%
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Net stable funding ratio
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118%
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The capital adequacy ratio of 18.9% was 7 percentage points above the stated regulatory requirement.
The CET1 ratio of 17.1% also indicates a substantial common equity capital base.
Meanwhile, the liquidity coverage ratio of 113% and net stable funding ratio of 118% suggest that the bank maintained adequate liquidity and stable funding, although both ratios have moderated from earlier peaks.
For investors, these figures indicate that HDFC Bank has capital headroom to support future lending growth without an immediate need for additional equity capital based on its reported position.
HDFC Bank's subsidiaries contributed to consolidated earnings across financial services, insurance, asset management and securities businesses.
Performance varied across subsidiaries, with HDB Financial Services recording the strongest profit growth among the major group companies listed.
Subsidiary Profit Comparison
| Subsidiary |
Q2 FY27 PAT / YoY growth |
| HDB Financial Services |
₹780 cr / +34.2% |
| HDFC Life Insurance |
₹510 cr / +13.6% |
| HDFC ERGO General Insurance |
₹160 cr / -10.0% |
| HDFC Asset Management |
₹750 cr / Approx. +4.2% |
| HDFC Securities |
₹270 cr / +26.1% |
HDB Financial Services recorded the highest profit growth at 34.2%, followed by HDFC Securities at 26.1%.
HDFC Life Insurance reported 13.6% profit growth, while HDFC Asset Management's profit increased approximately 4.2%.
HDFC ERGO General Insurance was the only subsidiary in the reported group to record a profit decline, with PAT falling 10%.
HDFC Bank's Ownership in Major Subsidiaries
|
Subsidiary
|
Bank's stake
|
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HDB Financial Services
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74.1%
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HDFC Life Insurance
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50.5%
|
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HDFC ERGO General Insurance
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50.2%
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HDFC Asset Management
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52.3%
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HDFC Securities
|
93.9%
|
HDB Financial Services Performance
HDB Financial Services reported a loan book of ₹1,245 billion, representing growth of 11.7% YoY.
Its net interest margin improved by 28 basis points to 8.2%, while gross stage-3 assets stood at 2.43%.
The combination of higher profitability and margin improvement made HDB Financial Services a notable contributor during the quarter.
However, its asset-quality trends remain relevant to the group's overall financial performance.
HDFC Bank Consolidated Results
On a consolidated basis, HDFC Bank reported net revenue of ₹78,690 crore and profit after tax of ₹20,700 crore in Q2 FY27.
Consolidated PAT increased 5.6% YoY, while profit for the first half of FY27 stood at ₹39,940 crore.
The consolidated results capture the contribution of the bank and its group businesses, although subsidiary profits should not be added directly to standalone PAT because consolidated accounting also reflects ownership interests and consolidation adjustments.
HDFC Bank shares came under pressure following the announcement of its September-quarter earnings.
On 19 October 2026, the stock declined as much as 2% to ₹715 on the BSE.
The market reaction reflected concerns over weaker treasury income, margin compression and higher provisions, despite improvements in deposit growth and asset quality.
What Concerned Investors?
Three developments help explain the cautious response.
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Lower non-interest income: Treasury trading gains declined approximately 67%, reducing overall earnings growth.
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NIM compression: Net interest margin fell to 3.16%, raising questions about the pace of margin recovery.
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Provisioning: Provisions rose 2.1% YoY, making credit-cost trends relevant despite improving NPA ratios.
At the same time, stronger underlying profit growth, deposit mobilisation and capital adequacy provided support to the bank's operating outlook.
Jefferies Target Price for HDFC Bank
Jefferies maintained a Buy rating on HDFC Bank with a target price of ₹880.
The reported target represented approximately 21% potential upside relative to the reference price used in the brokerage commentary.
This is a brokerage estimate rather than an assured return. The bank's actual share-price performance will depend on earnings, valuation, market conditions and other factors.
The HDFC Bank Q2 FY27 Results highlight several operating indicators that could influence future earnings and profitability.
The following areas deserve attention in subsequent quarterly results.
1. Net interest margin stabilisation
NIM declined to 3.16%. Investors should monitor whether deposit repricing, funding costs and changes in the lending mix support margin recovery.
2. CASA deposit growth
The CASA ratio declined to 31.6%. An improvement in low-cost deposit mobilisation could help reduce funding pressure.
3. Core earnings versus treasury income
Treasury gains can fluctuate significantly. Tracking PAT excluding treasury gains alongside reported PAT can provide a better understanding of recurring profitability.
4. Loan growth and credit quality
SME and business banking loans recorded strong growth. Future slippages, recoveries and credit costs will indicate whether this expansion remains sustainable.
5. HDB Financial Services performance
HDB reported 34.2% PAT growth and an 8.2% NIM. Its loan growth, asset quality and profitability will remain important for consolidated earnings.
6. Leadership transition
Deputy Managing Director Kaizad Bharucha is scheduled to retire on 31 December 2026. Management continuity and succession developments are additional governance factors to track.
HDFC Bank's Q2 FY27 earnings reflected a combination of healthy core banking growth and pressure on reported profitability.
The bank's underlying performance remained supported by deposit growth, higher advances, improving asset quality and strong capitalisation. However, declining treasury gains and NIM compression limited headline earnings growth.
The main positives were:
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Net interest income increased 9.7% to ₹34,619 crore.
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Core PAT excluding treasury gains grew 12.6%.
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Period-end deposits rose 18.8% YoY.
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Gross advances increased 16.3%.
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Gross NPA ratio improved to 1.11%.
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Capital adequacy remained strong at 18.9%.
The key concerns were lower treasury trading income, a declining CASA ratio, pressure on net interest margin and the need to maintain asset quality as lending expands.
Overall, HDFC Bank Q2 FY27 results showed stronger underlying earnings than the 4.7% reported PAT growth suggests. For investors evaluating the bank's long-term performance, the next important indicators will be NIM stabilisation, improvement in the deposit mix and continued control over credit costs.
Want to understand how HDFC Bank’s financial performance evolved between Q1 and Q2 FY27? Read the HDFC Bank Q1 FY27 Results Analysis to compare profit growth, net interest income, loan expansion and asset quality trends.
Frequently Asked Questions
1. What were HDFC Bank Q2 FY27 results?
HDFC Bank reported standalone net profit of ₹19,510 crore in Q2 FY27, up 4.7% YoY. Net interest income increased 9.7% to ₹34,619 crore, while net revenue rose 5.6% to ₹48,450 crore. Gross NPAs improved to 1.11%, and the capital adequacy ratio stood at 18.9%.
2. Why did HDFC Bank's net profit grow only 4.7% in Q2 FY27?
HDFC Bank's reported profit growth was affected mainly by a 67% decline in treasury trading gains, from ₹2,390 crore to ₹780 crore. This reduced non-interest income despite growth in fees and commissions. Excluding treasury gains, profit after tax increased 12.6% YoY.
3. What was HDFC Bank's net interest margin in Q2 FY27?
HDFC Bank reported a net interest margin of 3.16% on total assets and 3.32% on interest-earning assets in Q2 FY27. NIM declined from approximately 3.3% in Q2 FY26 and Q1 FY27, reflecting lower asset yields and continued funding-mix pressure.
4. How much did HDFC Bank's deposits and loans grow in Q2 FY27?
HDFC Bank's period-end deposits increased 18.8% YoY to ₹33,274 billion, while average deposits grew 16.8%. Gross advances increased 16.3% to ₹32,195 billion. The bank's CASA ratio declined to 31.6% as time deposits grew faster than low-cost deposits.
5. What should investors watch after HDFC Bank Q2 FY27 results?
Investors should monitor net interest margin, CASA deposit growth, treasury income, loan growth and credit costs. The performance of HDB Financial Services and the leadership transition following Kaizad Bharucha's scheduled retirement on 31 December 2026 are also important developments.