HDFC Bank Q2 FY27 Earnings Review: Steady Core Performance

Earnings & Profitability Dynamics HDFC Bank delivered a Q2 net profit of ₹19,510 crore, marking a 4.7% year-on-year (YoY) increase that firmly aligns with consensus estimates. Core operational performance demonstrated underlying resilience; excluding a sharp 67.4% YoY plunge in treasury trading income (down to ₹780 crore), core net profit expanded by a robust 12.6% YoY. Net Interest Income (NII) grew 9.7% YoY to ₹34,620 crore, marginally missing the ₹34,861 crore Street estimate. Net Interest Margin (NIM) compressed to a record low of 3.16%, down from 3.26% sequentially, underscoring systemic cost-of-funds pressures and a higher cost of deposits. Asset Quality & Risk Metrics Asset quality showed clear sequential improvement. The Gross NPA ratio dropped to 1.11% from 1.17% in Q1, outperforming the Street's 1.17% expectation. Excluding agriculture, the gross NPA ratio stood at an impressive 0.87%. Net NPA ratio improved to 0.37% from 0.41% sequentially, with absolute Gross NPAs stabilizing at ₹35,810 crore. Total provisions stood at ₹3,574 crore (up from ₹3,010 crore in Q1), maintaining a healthy overall credit cost ratio of 0.44%. Balance Sheet & Deposit Growth Total deposits surged 18.8% YoY to ₹33.27 lakh crore, driven predominantly by a 22.8% YoY rise in term deposits. CASA deposits grew 10.8% YoY to ₹10.52 lakh crore. Strategic & Market Context The bank maintained a highly efficient cost-to-income ratio of 39.1% and a solid capital adequacy ratio of 18.9%. This quarter marks a critical leadership transition. It is the final earnings report under outgoing MD & CEO Sashidhar Jagdishan, whose term concludes on October 26, preparing the ground for incoming chief Anup Bagchi. HDFC Bank shares closed 0.3% higher at ₹728.85 ahead of the earnings release, amidst a broader year-to-date decline of nearly 27%.