HDFC Bank reports its Q2 FY27 results on Saturday, October 17, 2026. These will be the first earnings under incoming MD and CEO Anup Bagchi, who officially takes charge on October 27. The numbers aren't out yet, so everything on Q2 below is an analyst estimate or part of the bank's business update. The latest actual data is from Q1 FY27.
Here's the head-scratcher. Gross advances grew 16.3% year-on-year to ₹32.19 lakh crore in the September quarter. Deposits grew 16.8% to ₹31.66 lakh crore. Yet experts expect net profit to inch up just 1% to 3% to roughly ₹18,850–18,930 crore. That's barely higher than the ₹18,641 crore reported in Q2 FY26 and actually below the ₹19,060 crore from the previous quarter.
So where's the money going? Three places. First, margins are thinning. Net interest income (NII) is expected to grow only 7% to 9% to about ₹34,310–34,410 crore, well below the loan growth pace. Second, fee income has taken a hit. In Q1, non-interest income fell sharply to ₹128.2 billion from ₹217.3 billion a year earlier, partly because one-time gains from subsidiary HDB Financial Services dropped out. Third, provisions are rising. Q1 provisions climbed 17.2% quarter-on-quarter to ₹30.6 billion.
The standalone Q1 numbers tell the story. NII rose just 1.4% quarter-on-quarter, operating expenses actually fell 1.6%, but profit after tax slipped 0.8%. The bank isn't struggling with costs. It's struggling to earn enough on its massive balance sheet.
Net interest margin (NIM) is expected to remain flat sequentially, with some analysts even predicting a slight dip to around 3.31% from 3.40% in the previous quarter. The pressure comes from the funding side, not the lending side.
The bank is still digesting legacy wholesale borrowings inherited from the HDFC Ltd merger. These borrowings cost about 11% and make up roughly 11% of total liabilities, down from 21% in late 2023 but not falling quickly. Management has said borrowings "don't change in a hurry". Investor Presentation +1
More importantly, the deposit mix is shifting toward costlier funds. Time deposits surged 22.8% year-on-year, while low-cost CASA deposits grew only about 10.8%. CASA now accounts for roughly 31% of total deposits, down from 38% around the time of the merger. This means a larger chunk of funding comes from term deposits that pay higher interest, pushing up the overall cost of funds. Investor Presentation
Yields on assets have fallen too, to 7.7% from 8.1% a year earlier, while the cost of funds dropped to 4.4% from 4.8%. The spread is narrowing. The bank is also cutting lending rates—it reduced its Marginal Cost of Funds-based Lending Rates (MCLR) by up to 10 basis points in September—which further compresses margins. Investor Presentation
HDFC Bank is deliberately growing deposits faster than loans. This repairs the loan-to-deposit ratio and addresses post-merger liquidity concerns, but it comes at a cost. Surplus deposits earn lower yields than loans, and the heavy reliance on time deposits instead of CASA means funding is more expensive.
The bank raised $11.5 billion in foreign currency deposits under the RBI's FCNR(B) swap facility and deployed $5.7 billion through overseas branch lending. This helps liquidity, but the margin benefit isn't clear yet.
The NII growth of 7% to 9% estimated for Q2 is in line with FY26 and Q1 FY27, suggesting margin normalization hasn't begun. For NII growth to catch up with loan growth, the bank needs either a recovery in CASA, a reduction in high-cost borrowings, or a shift toward higher-yielding assets. Management has called returning to a 38% CASA ratio a "multi-year journey". Transcript
Anup Bagchi's appointment as MD and CEO, approved by the RBI for a three-year term starting October 27, removes a major overhang. He's the first external CEO in the bank's 32-year history, bringing three decades of experience across the ICICI Group in banking, capital markets, and insurance.
But he inherits a complex situation. The bank has faced governance turbulence, including the abrupt resignation of former chairman Atanu Chakraborty in March and a board review in July that penalized the outgoing CEO, CFO, and retail assets head for "business overreach" related to certain deposit practices. The stock has fallen over 26% year-to-date, with much of the decline coming early in the year as these concerns mounted. Other
Analysts expect Bagchi to focus on deposit mobilization, margin management, and restoring investor confidence. The new chairman, Rajiv Kumar, has reportedly pushed for faster loan growth and stronger technology investments. Whether Bagchi accelerates growth or continues the cautious approach remains to be seen. For now, investors should expect Q2 commentary to reflect the outgoing team's plans, with clearer strategic signals likely in Q3.
Despite rapid loan growth, asset quality remains strong. Gross non-performing assets (GNPA) stood at 1.17% in Q1 FY27, or 0.91% excluding agriculture. Net NPA was 0.4%. The GNPA ratio has actually improved from 1.40% a year ago. Investor Presentation +2
Slippages in Q1 were ₹80 billion, but upgrades and recoveries of ₹40 billion and write-offs of ₹23 billion kept the net addition manageable. Credit cost was 40 basis points, up from 35 bps in the previous quarter but still comfortable. The bank holds total provisions of ₹724 billion against gross NPAs of ₹358 billion—a substantial buffer. Investor Presentation +2
For Q2, analysts expect GNPA to dip slightly to about 1.1%, with net NPA steady at 0.4% and credit costs in the 45–50 bps range. Slippages are estimated to decline to around ₹7,200 crore from ₹8,000 crore.
The loan growth is driven by business banking (up 22.3%), small and mid-market segments (up 18.7%), and corporate and wholesale lending (up 18.6%). Retail growth is slower at 7.2%, and unsecured lending has been deliberately tightened. This mix suggests the bank isn't chasing high-risk volume for the sake of growth. Investor Presentation +1
The stock closed around ₹729, down 26% for the year but holding above its 52-week low of ₹682. After sliding from around ₹825 in mid-July to that September low, the stock has built a base. It recently climbed above its 20-day and 50-day exponential moving averages for the first time since late September, though the 20-day average remains below the 50-day—a sign the downtrend is weakening but not reversed.
The options market is pricing in a move of about ±3.3% by the October 27 expiry, a range of roughly ₹704 to ₹752. This isn't a dramatic expectation, suggesting investors anticipate a relatively muted reaction. Historically, the stock has often moved less than 3% on results days, though this quarter comes with added uncertainty around leadership transition.
The consolidation between roughly ₹682 and ₹750 reflects a market in wait-and-see mode. A breakout toward the upper end would likely require evidence that margins are stabilizing or improving, CASA is recovering, and guidance is credible. A breakdown toward the lows would signal disappointment on these fronts.
HDFC Bank's Q2 FY27 results will be judged not on the headline profit figure, but on the trajectory of margins, the quality of deposit growth, and the clarity of guidance under new leadership. The bank has successfully navigated the post-merger balance sheet repair, but the harder work—restoring the low-cost deposit franchise and normalizing returns—lies ahead. Investors will be listening closely for signs that the corner is finally turning.
