HDFC Bank grows profit 4.7% as treasury gains fall

HDFC Bank Limited (HDFCBANK) reported standalone net profit of ₹19,510 crore for Q2 FY27, up 4.7% year on year. Net interest income increased 9.7% to ₹34,619 crore. The gap between loan growth and profit growth is worth examining. Advances grew 16.3% year on year, while deposits increased 18.8%. The bank's gross non-performing asset ratio also improved to 1.11% from 1.17% in the previous quarter. So the core lending business is still growing, and reported asset quality has improved. The pressure came from other income. Treasury trading gains fell to ₹780 crore from ₹2,390 crore a year earlier. Provisions for potential bad loans and other contingencies also increased 2.1% to ₹3,574 crore. My view is that this quarter looks weaker on headline profit than on underlying lending activity. Lower treasury gains can distort year-on-year comparisons, but I would not dismiss the rise in provisions. Credit costs need to be watched as the loan book expands. There is another number that matters: the credit-to-deposit ratio stood at 96%. Deposit growth exceeded loan growth this quarter, but the ratio remains high enough to make funding and liquidity important areas to monitor. The next trigger is Q3 FY27 results. I want to see net interest margin, deposit growth and credit costs before concluding that profit growth is accelerating. My stance: Lending momentum is encouraging, but I would wait for stronger profit growth and stable credit costs before becoming more positive.