Earnings call transcript: HDFC Bank Q2 2026 margin pressure eases as growth stays firm

India's largest private-sector lender, HDFC Bank, announced on Saturday a second-quarter profit of 195.10 billion Indian rupees ($2.05 billion), which fell short of analysts' expectations. The increase was driven by strong loan growth but was dampened by lower treasury income and higher provisions for bad loans. Anup Bagchi, a former ICICI group executive, is set to become HDFC Bank's next chief executive on October 27, taking over amidst heightened scrutiny of the bank's governance, profitability, and operational performance.

Treasury trading earnings declined significantly to 7.8 billion rupees from 23.9 billion rupees in the previous year, impacting overall profits. While loan growth was broad-based, resulting in a 16.3% rise in total loans, other income declined by 3.6% to 138.31 billion rupees. HDFC Bank's net interest income grew by 9.7% to 346.19 billion rupees, with deposits increasing 18.8% year-over-year.

The credit-to-deposit ratio was 96.0%. However, provisions for potential bad loans and other contingencies rose by 2.1% to 35.74 billion rupees, indicating improved asset quality with the gross non-performing asset ratio at 1.11% as of September.