HDFC Bank Q2 Results: Margins at record low; Treasury income drops 67%

HDFC Bank, India's largest private sector lender, reported September quarter results on Saturday, October 17, which were in-line with analyst expectations.

Net Interest Income (NII) or the bank's core income grew 9.7% in Q2FY26 to ₹34,620 crore from ₹31,552 last year. A CNBC-TV18 poll had estimated an NII of ₹34,861 crore.

Net profit for the September quarter stood at ₹19,510 crore, up 4.7% from from ₹18,641 crore in Q2FY26. The bank's bottom line stood in line with the CNBC-TV18 poll estimate of ₹19,567 crore.

HDFC Bank's net interest margin (NIM) declined to 3.16% in the September quarter, its lowest on record, compared with 3.26% in the June quarter.

The bank's treasury trading income declined 67.4% year-on-year to ₹780 crore, compared with ₹2,390 crore in Q2FY26.. Excluding treasury trading gains, HDFC Bank's net profit grew 12.6% year-on-year, compared with reported growth of 4.7%.

The bank's cost-to-income ratio stood at 39.1% during the quarter. Its total credit cost ratio was 0.44%.

Provisions stood at ₹3,574 crore, compared with ₹3,010 crore in the previous quarter and ₹3,501 crore in the year-ago quarter.

HDFC Bank's asset quality

remained stable during the September quarter, with gross non-performing assets (GNPA) in absolute terms at ₹35,810 crore, compared with ₹35,846 crore in June.

Net non-performing assets (NNPA) stood at ₹11,851 crore, against ₹12,357 crore in the previous quarter. In percentage terms, the gross NPA ratio stood at 1.11%, while the net NPA ratio was 0.37%, compared with 1.17% and 0.41%, respectively, in the June quarter. The Street had estimated the gross NPA ratio at 1.17% for the September quarter.

HDFC Bank's gross NPA ratio, excluding agriculture, stood at 0.87% in the September quarter, compared with 0.91% in the previous quarter and 0.99% in the year-ago period.

The bank's capital adequacy ratio stood at 18.9%, compared with 20% in the corresponding quarter last year.

As per its provisional business update for the September quarter, HDFC Bank's gross advances grew 16.3% year-on-year to ₹32.19 lakh crore. On a sequential basis, advances increased by 5.2%.

The bank's average advances under management, adjusted for inter-bank participation certificates, bills rediscounted, securitisation and assignment, grew 14% year-on-year to ₹31.87 lakh crore. The period-end figure stood at ₹33.07 lakh crore, a growth of 15.3% from the same quarter last year.

Total deposits at HDFC Bank stood at ₹33.27 lakh crore at the end of September, up 18.8% from the year-ago period. On a sequential basis, deposits grew 4.9%, slower than the 5.2% sequential growth in gross advances.

Within deposits, current account and savings account (CASA) deposits grew 10.8% year-on-year to ₹10.52 lakh crore. On a sequential basis, CASA deposits increased by 2.6%. Term deposits rose 22.8% year-on-year and 6.1% quarter-on-quarter to ₹22.75 lakh crore.

In its business update, HDFC Bank also disclosed that it had mobilised $11.5 billion worth of FCNR(B) deposits under the Reserve Bank of India's swap window. The bank's overseas branches extended loan facilities aggregating to $5.7 billion against these deposits. It had also issued $2.5 billion worth of US dollar-denominated senior unsecured bonds.

The results come amid investor focus on the bank's leadership transition, following the appointment of Anup Bagchi as the next managing director and chief executive officer. Bagchi is set to take charge after Sashidhar Jagdishan's term ends on October 26.

Shares of HDFC Bank ended 0.3% higher at ₹728.85 on Friday, ahead of the results announcement. The stock has declined nearly 27% so far in 2026.