Mumbai: HDFC Bank, India’s largest private sector lender, reported a 5 per cent year-on-year increase in standalone net profit for the first quarter of FY27, supported by steady growth in lending income and an improvement in gross asset quality.
The bank posted a net profit of Rs 19,060 crore for the April–June quarter, compared with Rs 18,155 crore in the corresponding period last year. Net interest income (NII), a key indicator of a bank’s core earnings, also registered healthy growth during the quarter.
While gross non-performing assets (NPAs) improved on a yearly basis, net NPAs saw a slight sequential increase. The lender also reported a moderation in its capital adequacy ratio, even as its balance sheet continued to expand.
Net profit and NII register steady growth
HDFC Bank’s standalone net profit rose to Rs 19,060 crore, marking a 5 per cent increase from the year-ago period.
The bank’s net interest income (NII), which measures the difference between interest earned on loans and interest paid on deposits, increased 7 per cent year-on-year to Rs 33,534 crore, up from Rs 31,438 crore in Q1 FY26.
The lender also reported a:
- Net Interest Margin (NIM): 3.26 per cent based on total assets
- NIM on interest-earning assets: 3.40 per cent
The figures indicate continued strength in the bank’s core lending operations despite a challenging interest rate environment.
Asset quality improves despite slight rise in net NPAs
HDFC Bank reported an improvement in its gross asset quality during the quarter.
Gross NPAs declined by more than 3 per cent year-on-year to Rs 35,846 crore.
The gross NPA ratio stood at:
- 1.17 per cent in Q1 FY27
- 1.15 per cent in Q4 FY26
- 1.40 per cent in Q1 FY26
While the ratio increased marginally compared to the previous quarter, it remained significantly lower than the corresponding period last year.
However, net NPAs edged higher to Rs 12,357 crore.
The net NPA ratio came in at:
- 0.41 per cent in Q1 FY27
- 0.38 per cent in Q4 FY26
- 0.47 per cent in Q1 FY26
Although there was a slight sequential increase, the figure remained below last year’s level.
Provisions decline sharply
The bank’s provisions for bad loans and contingencies declined substantially compared to the previous year.
Provisions stood at Rs 3,060 crore, representing a 79 per cent decline year-on-year.
However, they increased by 17 per cent sequentially from Rs 2,610 crore reported in the March quarter.
Lower provisions generally indicate reduced stress in the loan portfolio, although quarterly movements can vary depending on recoveries and regulatory requirements.
Capital adequacy moderates
HDFC Bank’s Capital Adequacy Ratio (CAR) moderated slightly during the quarter.
The CAR stood at:
- 19.57 per cent in Q1 FY27
- 19.71 per cent in Q4 FY26
- 19.88 per cent in Q1 FY26
Despite the marginal decline, the ratio remains comfortably above regulatory requirements, reflecting the bank’s strong capital position.
Balance sheet crosses Rs 43 lakh crore
The lender continued expanding its balance sheet during the quarter.
As of June 30, 2026, HDFC Bank’s total balance sheet stood at Rs 43.97 lakh crore, compared with Rs 39.54 lakh crore a year earlier.
The growth reflects continued expansion in lending, deposits and overall banking operations.
Stock performance remains mixed
HDFC Bank shares have delivered mixed returns across different timeframes.
According to available market data:
- The stock has declined around 1 per cent over the past week.
- It has gained more than 4 per cent over the last month.
- It remains over 17 per cent lower in 2026 so far.
- Over the past year, the stock has fallen by more than 17 per cent.
- Over a three-year period, it is down around 2 per cent.
- Investors with a five-year holding period have seen gains of approximately 8 per cent.
Market participants will continue to monitor the bank’s loan growth, deposit mobilisation and asset quality in the coming quarters.
Conclusion
HDFC Bank delivered a stable set of first-quarter results for FY27, with higher net profit and steady growth in net interest income reflecting resilience in its core banking business. While gross asset quality improved and provisions declined sharply, the slight rise in net NPAs and moderation in capital adequacy will remain areas to watch. Overall, the lender continues to maintain a strong balance sheet and remains well-capitalised as it navigates the evolving banking environment.
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