How Did HDFC Bank Beat Q2 FY26 Estimates Despite NIM Compression?
HDFC Bank, India’s largest private sector lender, reported better-than-expected Q2 FY26 results, led by stronger treasury gains and lower provisions. Despite marginal NIM compression, the bank outperformed Street expectations on both net profit and NII. Asset quality metrics improved further, reinforcing its balance sheet strength.
The bank’s continued scale advantage, cost management, and deposit franchise resilience helped offset operational moderation. Analysts note that while margins remain slightly under pressure, the underlying balance sheet metrics remain solid.
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HDFC Bank Q2 FY26 Performance vs Estimates
HDFC Bank delivered a solid earnings beat. Net profit stood at ₹18,641 crore versus the Street estimate of ₹17,252 crore, while NII came in at ₹31,551 crore against expectations of ₹31,298 crore. The YoY performance reflected stable loan growth, treasury gains, and better other income contribution.
| Metric | Q2 FY26 Result | Street Estimate |
|---|---|---|
| Net Profit | ₹18,641 Cr | ₹17,252 Cr |
| Net Interest Income (NII) | ₹31,551 Cr | ₹31,298 Cr |
| NIMs | 3.27% | 3.25% (Est) |
The bank’s Net Interest Margin (NIM) stood at 3.27%, marginally below 3.35% in the previous quarter, yet above expectations. Despite this, operating profit fell sequentially due to the absence of merger-related income and higher base effects.
Detailed Q2 FY26 Financial Highlights
Below is a comprehensive look at HDFC Bank’s financial metrics compared to the previous year and quarter:
| Metric | Q2 FY26 | YoY / QoQ Change |
|---|---|---|
| Net Profit | ₹18,641 Cr | ↑11% YoY | ↑3% QoQ |
| NII | ₹31,551 Cr | ↑5% YoY | Flat QoQ |
| Operating Profit | ₹27,923 Cr | ↓22% QoQ |
| Provisions | ₹3,500 Cr | ↓76% QoQ |
| Gross NPA | ₹34,289 Cr (1.24%) | ↓7% QoQ | 1.40% (Prev) |
| Net NPA | ₹11,447 Cr (0.42%) | ↓21% QoQ | 0.47% (Prev) |
Asset quality improvement remains a key positive, with both Gross and Net NPAs declining sequentially. The sharp drop in provisions also boosted profitability, aided by treasury and other income gains.
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Balance Sheet and Deposit Trends
HDFC Bank’s balance sheet continues to expand steadily, underpinned by strong deposit accretion and healthy loan mix diversification. CASA ratio remained above 33%, indicating stable retail franchise strength.
| Key Balance Sheet Metric | Q2 FY26 | YoY / QoQ |
|---|---|---|
| Balance Sheet Size | ₹40,030 bn | ↑8.5% YoY |
| Average Deposits | ₹27,105 bn | ↑15.1% YoY | ↑2% QoQ |
| CASA Deposits | ₹8,770 bn | ↑8.5% YoY | Ratio 33.9% |
| Total Deposits | ₹28,018 bn | ↑12.1% YoY |
| Advances Under Management | ₹27,946 bn | ↑9% YoY | ↑1.9% QoQ |
| Loan Mix | Retail ↑7.4% | SME ↑17% | Corporate ↑6.4% | Overseas 1.8% of total |
The bank’s steady deposit momentum and improving asset mix underline resilience. Treasury and other income also contributed positively, cushioning NIM compression.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes that HDFC Bank’s Q2 FY26 results reaffirm its leadership in private banking. The beat on earnings, falling NPAs, and stable deposit growth reflect operational resilience. Although NIM pressure persists, strong treasury gains and robust balance sheet growth highlight management’s efficiency in volatile conditions.
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Related Queries on HDFC Bank Q2 FY26 Results
- What Drove HDFC Bank’s Profit Beat in Q2 FY26?
- How Did NIM Compression Affect Margins?
- Is the Drop in Provisions Sustainable for Coming Quarters?
- What Does Deposit Growth Signal for FY26 Outlook?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
