HDFC Bank reports 4.7 percent Q2 profit rise as treasury gains plunge

HDFC Bank has reported a standalone net profit of Rs 19,510 crore for the second quarter of FY27, marking a 4.7 per cent year-on-year increase that closely aligned with market projections according to reporting by Moneycontrol. The private sector lender's bottom-line expansion was tempered by a sharp contraction in treasury trading gains, even as its core lending operations and asset quality displayed robust health. Alongside its financial disclosures filed with stock exchanges on Saturday, October 17, 2026, the institution announced a significant boardroom transition involving the departure of a long-standing deputy managing director and the re-appointment of a former central banking executive.

The bank's financial results reveal a tug-of-war between strong core banking growth and volatile treasury returns. Net interest income climbed 9.7 per cent to Rs 34,619.2 crore, while Latestly noted the figure at Rs 34,620 crore. This expansion was driven by a 16.3 per cent year-on-year increase in gross advances, which reached Rs 32,19,500 crore as of September 30, 2026. Retail loans grew by 11.7 per cent, small and mid-market enterprise loans jumped 23.5 per cent, and corporate and wholesale loans expanded by 16.4 per cent. Average advances under management stood at Rs 31,87,200 crore during the quarter, up 14.1 per cent year-on-year and 4.9 per cent sequentially.

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However, profitability faced a heavy drag from investment portfolios. Treasury trading gains plummeted 67 per cent to Rs 780 crore, down from Rs 2,390 crore in the corresponding quarter of the previous year. According to the bank's disclosures cited by Latestly, net profit excluding treasury trading gains actually grew by approximately 12.6 per cent over the quarter ended September 30, 2025. Total net revenue advanced to Rs 48,450 crore from Rs 45,900 crore a year earlier, while fee and commission income rose to Rs 9,690 crore from Rs 8,840 crore. Operating expenses increased to Rs 18,970 crore from Rs 17,980 crore, and provisions and contingencies stood at Rs 3,570 crore according to Latestly, while Moneycontrol reported provisions at Rs 3,574 crore.

Asset quality metrics offered encouraging signs for the lender. The gross non-performing asset ratio improved to 1.11 per cent of gross advances as of September 30, 2026, compared with 1.17 per cent in the preceding quarter and 1.24 per cent a year earlier. Excluding non-performing assets in the agricultural segment, the GNPA ratio stood at 0.87 per cent, compared with 0.91 per cent in June 2026 and 0.99 per cent in September 2025. Gross NPAs stood at Rs 35,810 crore at the end of September, marginally lower than Rs 35,846 crore in the preceding quarter. Net NPAs declined sequentially to Rs 11,851 crore from Rs 12,357 crore, bringing the net NPA ratio down to 0.37 per cent.

Parallel to the earnings release, the lender announced a major shift in its executive ranks. Deputy Managing Director Kaizad Bharucha, described by Business Today as a foundational pillar who spent over three decades shaping the institution's growth and stability, submitted a formal request to step down from his role at the close of business hours on December 31, 2026. The board accepted his departure, which has been forwarded to the Reserve Bank of India for regulatory approval. Directors and the Governance, Nomination and Remuneration Committee acknowledged Bharucha's instrumental role in conceptualising, establishing, and developing the bank's robust credit architecture, recognising it as a defining institutional strength that drove the bank's resilience.

To bolster regulatory oversight amid this leadership transition, the board approved the re-appointment of Lily Vadera as an Independent Director for a fresh three-year term effective from November 26, 2026, to November 25, 2029, subject to shareholder approval according to Scanx. Vadera brings over 34 years of extensive central banking experience and holds a Master of Arts in International Relations, having retired as an Executive Director from the RBI in October 2020. During her tenure at the central bank, she headed the Department of Regulation, managing regulatory frameworks across all categories of banks and non-banking finance companies, and represented the institution on international platforms including the Basel Committee on Banking Supervision in Switzerland, the Financial Stability Board, and G-20 sub-groups focused on SME and green financing.

As HDFC Bank absorbs these operational and boardroom shifts, market participants will monitor the formal approval processes for executive transitions within the business sector, alongside the pending shareholder vote on Vadera's directorship and the regulatory review by the central bank.