HDFC Bank Q2 results preview: PAT, NII may rise up to 9% YoY; deposit growth in focus

HDFC Bank is expected to report steady net interest income (NII) growth in the September quarter, with investors likely to focus on net interest margins (NIMs), deposit mobilisation, loan growth and asset quality.

The country's largest private sector lender will announce its financial results for the quarter and half-year ended September 30, 2026, on Saturday, October 17.

Brokerage estimates point to NII growth of around 8% year-on-year (YoY), while expectations for profit after tax (PAT) vary. JM Financial expects PAT to rise 1.4% YoY, while ICICI Securities and Motilal Oswal Financial Services (MOFSL) project growth of 8.3% and 3.9%, respectively.


Operating profitability is expected to remain relatively subdued, with the trajectory of credit costs and management commentary on loan growth and margins likely to be key monitorables.

NII growth likely to remain steady

Brokerages expect HDFC Bank's NII to grow 7.7-8.9% YoY in Q2FY27, supported by loan growth. Sequential growth, however, is expected to remain modest.

MOFSL expects NII to rise 8.9% YoY to Rs 34,370 crore, compared with Rs 33,530 crore in the June quarter, translating into 2.5% quarter-on-quarter (QoQ) growth.

The brokerage expects loan growth of 14.9% YoY and 2.3% QoQ, led by business banking, corporate and agricultural loans. Mortgage lending growth, however, is expected to lag.

ICICI Securities estimates NII at Rs 33,978.8 crore, up 7.7% YoY and 1.3% QoQ. JM Financial projects NII at Rs 34,158.9 crore, an increase of 8.3% YoY and 1.9% sequentially.

Margins likely to remain under pressure

Net interest margins are expected to moderate sequentially in Q2FY27, even as loan and deposit growth remain healthy.

MOFSL expects NIMs to decline by 8 basis points QoQ, citing continued pressure on margins. ICICI Securities sees NIMs moderating by 9 basis points both sequentially and YoY to 3.31%, against 3.40% in the June quarter and the year-ago period.

The trajectory of margins will be closely watched, as stronger credit growth may not fully translate into NII expansion if lending yields weaken or funding costs remain elevated.

Management commentary on deposit pricing, the cost of funds and the outlook for NIMs will therefore be important in assessing the bank's earnings trajectory.

Deposit mobilisation in focus

Deposit mobilisation will remain a key monitorable as HDFC Bank seeks to support advances growth while managing funding costs.

MOFSL expects deposits to grow 19.4% YoY and 5.5% QoQ, aided by strong foreign currency non-resident (bank) deposit inflows.

On the lending side, the brokerage expects advances to rise 14.9% YoY, with business banking, corporate and agricultural lending driving growth. Mortgage loan growth is expected to lag.

ICICI Securities projects advances at Rs 3,17,398.2 crore, up 15.6% YoY and 4.5% sequentially. MOFSL estimates advances at Rs 3,16,880 crore, up 15.4% YoY.

The pace of deposit mobilisation and its impact on funding costs will be important in determining whether the bank can sustain loan growth without putting further pressure on margins.

Profit growth may remain modest

Despite steady NII growth, brokerage estimates for operating profit and net profit remain mixed, reflecting differing assumptions on income, expenses and provisions.

JM Financial expects HDFC Bank to report PAT of Rs 18,908 crore, up 1.4% YoY. It estimates pre-provision operating profit (PPOP) at Rs 28,604.3 crore, an increase of 2.4%.

ICICI Securities is more optimistic, projecting PAT at Rs 20,195.9 crore, up 8.3% YoY and 6% QoQ. It expects PPOP to rise 4% YoY and 3.1% sequentially to Rs 29,049.8 crore.

MOFSL expects PAT to increase 3.9% YoY to Rs 19,370 crore, while operating profit is estimated at Rs 28,720 crore, up 2.9% YoY.

MOFSL expects operating cost ratios to remain contained, supported by operating leverage. However, the relatively modest growth projected for operating profit suggests that margins, other income, operating expenses and provisions will be crucial in determining the final earnings outcome.

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Asset quality remains a key monitorable

Asset quality is expected to remain broadly stable, with investors likely to track credit costs and fresh slippages for signs of stress across lending segments.

MOFSL expects credit costs to remain in the 45-50 basis points range. It projects gross non-performing assets (GNPA) to moderate to 1.1% in Q2FY27 from 1.2% in Q1FY27 and remain at that level through Q4FY27. Net NPA is expected to stay at 0.4%.

ICICI Securities expects slippages to decline 10% sequentially to Rs 7,200 crore in Q2FY27, compared with Rs 8,000 crore in the previous quarter. The estimate is also 2.7% lower than the year-ago period.

The movement in slippages and credit costs will offer further clues on the health of the bank's loan book and the potential impact of provisions on profitability.

Management commentary, growth outlook in focus

Beyond the headline numbers, investors will look for clarity on loan growth, deposit mobilisation, NIMs, operating costs and asset quality.

The pace of mortgage lending, the contribution of business banking and corporate loans, and the sustainability of deposit inflows will be key indicators of the bank's growth outlook.

MOFSL has retained its Buy rating on HDFC Bank with a target price of Rs 925, implying an upside of 28% from its cited market price of Rs 720.

However, the brokerage has cut its earnings per share estimates for FY27 and FY28 by 0.4% and 1.3%, respectively, indicating some moderation in its earnings expectations.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here