HDFC Bank (HDFCBANK) Q2 25/26 earnings summary

Executive summary

• Economic activity in India is strengthening, with strong growth in deposits and advances, stable asset quality, and robust profitability; profit after tax for Q2 FY26 reached ₹186.4 billion, with a return on assets of 1.9% and return on equity of 14.4%.

• Consolidated profit after tax for the quarter was ₹196.1 billion, up 10.0% year-over-year; for the half year, consolidated PAT was ₹358.7 billion.

• The bank maintained a healthy capital adequacy ratio of 20.0% and CET1 at 17.5%.

• Investments in technology, digital banking, and distribution are expected to drive operating leverage and customer experience improvements.

Financial highlights

• Net interest income for Q2 FY26 was ₹315.5 billion, up 4.8% year-over-year; non-interest income at ₹143.5 billion, up 25.0% year-over-year; net revenue grew 10.4% year-over-year to ₹459.0 billion.

• NIM compressed by about 8 basis points due to front-loaded interest rate cuts, but core net interest margin for the quarter was 3.27%.

• Cost of funds declined by 18-19 basis points in the quarter, with further improvement expected as deposit repricing continues.

• Gross advances as of September 30, 2025, were ₹27,692 billion, up 9.9% year-over-year; deposits were ₹28,018 billion, up 12.1% year-over-year.

• Provisions decreased 75.8% quarter-over-quarter but increased 29.6% year-over-year; floating provision of ₹9,000 crore made during the half year.

Outlook and guidance

• Deposit pricing tailwinds are expected to support NIM recovery over the next several quarters, assuming stable rates.

• The bank targets continued growth in deposits and advances, with a focus on maintaining asset quality and capital strength.

• ROA is expected to benefit from cost of funds improvements and operating leverage from technology and distribution investments.

• ESG initiatives include a target to be carbon neutral by FY32 and a sustainable finance portfolio at 18.69% of the loan book.

• Management highlighted continued focus on expanding the distribution network, digital banking, and maintaining strong asset quality.