The bottom line held steady, but the drivers shifted beneath the surface. HDFC Bank reported a net profit of ₹19,510 crore for the September quarter, up 4.7% year-on-year. It landed squarely on estimate. But strip away the volatility in treasury trading income, which collapsed 67.4% to ₹780 crore, and the core engine is humming louder: underlying profit growth actually hit 12.6%.
Margins, however, are the story investors are watching. Net interest margin (NIM) slipped to 3.16% in the quarter, down from 3.26% in June. It’s the lowest level on record. Yet, outgoing MD and CEO Sashidhar Jagdishan told CNBC-TV18 that the pressure is nearing its peak. With a significant slice of the loan book linked to external benchmarks, he expects the NIM to turn upwards starting next quarter as the interest rate trajectory shifts in the bank’s favor. Net interest income itself rose 9.7% year-on-year to ₹34,620 crore, showing the volume side is still strong even if the spread compressed.
Asset quality remains the quiet strength here. Gross NPAs stood at a healthy 1.11%, and deposits swelled 18.8%, providing ample liquidity runway. Jagdishan expressed confidence in the resilience of the balance sheet, noting that the clean-up phase is largely behind them, though minor work remains. This stability is critical as the bank navigates the leadership transition.
The baton passes on October 26. Anup Bagchi, a financial services veteran with 34 years of experience, steps into the MD/CEO role. Jagdishan emphasized that HDFC Bank is an institution, not a personality, citing the depth of leadership including Kaizad Bharucha and Srinivasan Vaidyanathan. Bagchi echoed this, stating the organization’s commitment remains intact and the team is ready to execute the next phase of growth.
For traders, the immediate catalyst is the confirmation of margin normalization. If the NIM rebounds as predicted, the pressure on valuation multiples should ease. Watch the January quarter results closely for the first concrete evidence of this spread recovery. Until then, the market is pricing in a steady, if slightly slower, growth trajectory.