HDFC Bank reported a 5.55 percent increase in consolidated net profit to Rs 20,700 crore for the second quarter ended September 2026, with profit expansion dampened by treasury performance. On a standalone basis, net profit for the quarter rose 4.7 percent to Rs 19,510 crore, while core profit after tax excluding treasury operations expanded 12.6 percent year on year. The earnings announcement coincided with an executive leadership transition as ICICI Group veteran Anup Bagchi prepares to assume the role of managing director and chief executive later this month.
Analysts believe the appointment of banking veteran Anup Bagchi should help restore investor and customer confidence in HDFC Bank.
Alongside Jagdishan's impending departure, HDFC Bank announced that incumbent Deputy Managing Director Kaizad Bharucha has decided to leave the institution, according to The Economic Times. Bharucha, who twice emerged as a contender for the managing director role, will formally step down from his executive duties on December 31, 2026. Both Jagdishan and Bharucha are concluding executive careers spanning three decades with the lender, describing their exits as personal choices after long institutional tenures.
Attending his first post-earnings call as an additional director, Bagchi indicated that while the HDFC merger created institutional strength, further work remains necessary on the balance sheet. Bagchi stated that in the immediate term he will gather insights by engaging with regulators, staff, Jagdishan, and Bharucha before setting operational priorities. Jagdishan explained that replacing HDFC's legacy market borrowings required taking high-cost term deposits, which combined with household shifts toward capital market investments to compress margins. Net interest margin contracted to 3.2 percent from 3.3 percent in the preceding quarter, while the low-cost current and savings account ratio declined to 31 percent.
Asset quality metrics improved during the September quarter, with the gross non-performing assets ratio declining to 1.11 percent from 1.17 percent in the previous quarter and 1.24 percent a year ago. Total headcount decreased by 2,849 employees over the three-month period and fell by approximately 10,000 across the past year to 2.10 lakh staff members. Overall capital adequacy stood at 18.9 percent at the end of September 2026, moderating from 20 percent recorded in the corresponding period of the previous year.
In the retail mortgage market where State Bank of India gained ground, Jagdishan noted that HDFC Bank deliberately withdrew from certain business segments where margins proved unviable. Addressing foreign currency non-resident account mobilization where HDFC Bank raised $11 billion compared to $18 billion by ICICI Bank, leadership acknowledged thin overseas branch presence as a key factor. Responding to board succession queries, Jagdishan affirmed that internal management talent remains abundant for the incoming leadership to evaluate for future executive director appointments.
State Bank of India holds 27.3% of India's home loan market share, with ₹8.51 lakh crore in outstanding home loans, ranking as the top mortgage lender ahead of HDFC Bank.
