HDFC Bank's Q2 net profit up 4.7%; treasury slump weighs on earnings

HDFC Bank's Q2 FY27 net profit rose 4.7% to Rs 19,510 crore, constrained by a 67% slump in treasury gains. Core lending income grew, with NII up 9.7%, and asset quality improved as gross NPAs fell to 1.11% from 1.24% a year ago.

Representative Image (Photo/HDFC Bank)

HDFC Bank reported a 4.7 per cent year-on-year rise in standalone net profit to Rs 19,510 crore for the July-September quarter of FY27, as a sharp 67 per cent decline in treasury trading gains weighed on earnings despite stronger income from its core lending business.

Core Performance vs. Treasury Drag

According to the bank's earnings release filed with the stock exchanges on Saturday, treasury trading gains fell to Rs 780 crore from Rs 2,390 crore in the corresponding quarter last year. The decline limited overall profit growth even as net interest income, the difference between interest earned and interest paid, increased by 9.7 per cent.

Highlighting the impact, the bank stated, "PAT, excluding treasury trading gains, grew by approximately 12.6% over the quarter ended September 30, 2025." Net interest income rose to Rs 34,620 crore from Rs 31,550 crore a year earlier, supported by continued expansion in lending. The bank said, "Net interest margin was at 3.16% on total assets, and 3.32% based on interest earning assets."

Key Financial Metrics

Net revenue increased to Rs 48,450 crore from Rs 45,900 crore, while fee and commission income rose to Rs 9,690 crore from Rs 8,840 crore. Operating expenses stood at Rs 18,970 crore, while provisions and contingencies were Rs 3,570 crore during the quarter.

Asset Quality Improves

Despite pressure on earnings, asset quality improved. "Gross non-performing assets were at 1.11% of gross advances as on September 30, 2026," the bank said, compared with 1.17 per cent in the preceding quarter and 1.24 per cent a year earlier. Net NPAs stood at 0.37 per cent.

Business and Balance Sheet Growth

Total deposits grew 18.8 per cent year-on-year to Rs 33.27 lakh crore, while gross advances increased 16.3 per cent to Rs 32.20 lakh crore.

The results highlight stronger core banking operations and improving asset quality, even as lower treasury gains restricted overall profitability.

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