HDFC Bank Targets Margin Recovery with Strong Deposit Growth and Technology-Led Expansion
HDFC Bank expects its net interest margin (NIM) to gradually improve over the next 2–3 years as the impact of its merger with HDFC Ltd reduces. The bank believes that continued growth in deposits, a stronger focus on retail and MSME lending, and increased technology adoption will support this recovery.
For Q1 FY27, HDFC Bank reported a standalone net profit of ₹19,059.72 crore, up 4.98% year-on-year, while net interest income (NII) increased 6.7% to ₹33,535.95 crore. The bank's NIM stood at 3.26% on total assets and 3.40% on interest-earning assets. Average deposits grew 10.8% year-on-year to ₹30,386 billion, while average advances increased 13.3% to ₹30,115 billion, reflecting healthy business momentum.
The bank also highlighted that over 95% of first-time home loan customers now open a savings account, strengthening customer relationships after the merger. HDFC Bank currently holds over 20% market share in MSME lending, ranks first in 15 states, is among the top three lenders in 25 states, operates across 721 districts, and has added more than 4,000 branches in the last five years, with nearly half located in semi-urban and rural regions.
Alongside expanding its physical presence, the bank continues to invest in its technology infrastructure, including its in-house generative AI platform, NEEV. On the asset quality front, gross non-performing assets (GNPAs) stood at 1.17% as of June 30, 2026, compared with 1.15% in March, while net NPAs remained low at 0.41%, indicating stable asset quality despite the ongoing integration process.