HDFC Bank Q2 FY27 Results Analysis: Normalized PAT Jumps 12.48%, NIM Compresses 10 bps (HDFCBANK)

HDFC Bank Ltd's Q2 FY27 numbers came in strong, with revenue of Rs. 48,450.20 Cr (+5.55% YoY) and PAT growth of +4.66% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

HDFC Bank delivered Q2FY27 net revenue of Rs.48,450 cr (+5.55% YoY) with NII up 9.72% and normalized PAT (ex-treasury) up 12.48%, while reported PAT grew 4.66% as treasury trading gains fell 67% YoY. Loan growth of 16.3% exceeded the guided 'higher than system (~13%)' target, SME loans grew 23.5% vs 18-21% guidance, cost-to-income held at 39.15% below the 40% ceiling, and GNPA improved to 1.11% — the fifth consecutive quarter of asset quality improvement. The forward swing factor is NIM, which compressed 10 bps QoQ to 3.16% as CASA fell to 31.6% and time deposits grew 22.8% YoY.

Key Investment Insights

Key Positives

• Gross advances grew 16.3% YoY, above the guided 'higher than system (~13%)' target; SME loans grew 23.5% YoY vs guided 18-21%
• GNPA improved to 1.11% (from 1.17% QoQ and 1.24% YoY) and NNPA to 0.37% — fifth consecutive quarter of improving asset quality
• Normalized PAT (ex-treasury) grew 12.48% YoY to Rs.18,915 cr, versus reported PAT growth of 4.66%
• NII grew 9.72% YoY to Rs.34,619 cr on stable lending spreads
• Cost-to-income at 39.15%, below the 40% guided ceiling for a fourth consecutive quarter
• Deposits grew 18.76% YoY to Rs.33,27,449 cr, outpacing advances growth of 16.3% and improving the credit-deposit ratio to ~96.0%
• Retail Banking EBIT grew 15.64% YoY on 4.67% revenue growth, with segment margin up 126 bps to 13.30%
• CAR at 18.87% versus the 11.9% regulatory minimum

Risk Factors

• NIM compressed 10 bps QoQ to 3.16% as CASA ratio fell to 31.6% (time deposits +22.8% YoY vs CASA +10.8%)
• Treasury trading gains fell 67% YoY to Rs.780 cr, dragging Other Income down 3.62% YoY and limiting reported PAT growth to 4.66% against NII growth of 9.72%
• Provisions rose 16.82% QoQ to Rs.3,574 cr
• CAR eased to 18.87% from 19.96% a year ago and 19.57% in Q1 as risk-weighted assets grew
• Wholesale Banking segment margin compressed 106 bps YoY to 20.03% despite 24.67% revenue growth