HDFC Bank shares fall over 2% as net interest margin hit new lows of 3.1%, net profit jumps 4.7% YoY

HDFC Bank shares opened flat on Monday but pared the early gains to trade more than 2% lower at ₹711 apiece in the afternoon on the NSE, after the country’s largest private sector lender posted mid-single-digit growth in profitability for the quarter ended September 2026. Besides this, the bank’s Deputy Managing Director, Kaizad Bharucha’s, is expected to exit in January 2027, which is also expected to drive sentiment on Monday.

HDFC Bank Q2FY27 results

The bank posted steady growth in net interest income of 10% at ₹34,649 crore for the quarter ended September 2026, as compared to ₹31,559 crore for the quarter ended September 2025. Besides this, the non-interest income for the quarter declined 3.6% YoY to ₹13,800 crore.

The net-interest margin on the interest-earning assets for the quarter stood at 3.3%, down 10 bps from 3.4% in the same period last year. The total net interest margin also fell 10 bps to 3.2% compared with 3.3% in the same period last year.

The marginal dip in the margins can largely be attributed to a 20 bps fall in the overall yield on assets at 7.6% for the quarter, as compared to 7.8% in the same period last year and 7.7% in the previous quarter. Declining yield on assets remains a major headwind for the country’s largest private sector lender.

The asset quality for the quarter remained largely stable at 1.1% GNPA and 0.4% NNPA, improving from 1.2% and 0.4% in the same period last year and sequentially. Additionally, the bank added fresh slippages of ₹6,100 crore.

Lastly, the net profit jumped 4.7% YoY to ₹19,510 crore as compared to ₹18,600 crore in the same period last year. The profitability growth was sustained largely due to 2.1% growth in provisioning at ₹3,570 crore for the quarter.

Kaizad Bharucha exit

Besides this, Deputy Managing Director Kaizad Bharucha's exit effective December 31, 2026, has also led to a fresh overhang on the stock. The Bank’s exchange filing on Saturday read, “We further inform that Mr. Kaizad Bharucha, Deputy Managing Director, HDFC Bank, has requested cessation from the service of the Bank with effect from the close of business hours on December 31, 2026”.

This comes after the Reserve Bank of India (RBI) approved Anup Bagchi as the new managing director and chief executive officer after Sashidhar Jagdishan’s exit as MD & CEO. Bharucha was considered among the top contenders for the post of MD and CEO, but failed to meet the regulatory requirements of the RBI, which required the incoming MD and CEO to be a wholetime director for 15 years.