HDFC Bk sees tailwind for NIM persisting 2-4 qtrs while deposits are repriced
This story was originally published at 19:50 IST on 18 October 2025
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--HDFC Bank: Will grow quicker than system, gain loan mkt share in FY27
--CONTEXT: Comments by HDFC Bank mgmt at media call post Q2 earnings
--HDFC Bank: See tailwinds in NIM in next 2-4 quarters as deposits reprice
--HDFC Bank: Loan growth to be in line with system in FY26
--HDFC Bank: To use AI to simplify processes, not decision making
--HDFC Bank: Some bit of asset repricing from rate cuts still to go
NEW DELHI – The tailwind for HDFC Bank's net interest margin is likely to persist for the next 2-4 quarters as deposit rates are yet to be repriced after the repo rate cuts of 100 basis points by the Reserve Bank of India since February, the private-sector lender's management said Saturday. In the September quarter, the bank's net interest margin compressed 8 bps sequentially to 3.27%.
Meanwhile, the repricing of assets after the rate cuts is almost complete with just a little bit left, the management told the media Saturday in a call after the bank's financial results for the September quarter. HDFC Bank's advances as of Sept. 30 were INR 27.69 trillion, up 9.9% on year.
The management did not offer any projection on credit growth but said it expects the bank's loan growth to be in line with that of the banking system in the current financial year. In the next financial year, however, the bank's loan growth is likely to be faster than that of the banking system, it said.
India's largest private-sector bank reported a net profit of INR 186.41 billion for the September quarter, up almost 11% on year. Sequentially, the net profit was up slightly from INR 181.55 billion reported for the June quarter. Shares of the bank had closed 0.8% higher at INR 1002.55 on the National Stock Exchange Friday.
The management said it is fairly comfortable and ready to shift to the RBI's expected credit loss norms. The RBI has issued the draft norms for consultation. The management said the bank will also reach out to the regulator for more clarity on the norms.
As per the RBI's draft norms on the credit loss framework, which will take effect in April 2027, banks will have to set aside more funds for potential bad loans. The norms also say banks must classify non-performing financial assets into three categories based on the period for which the assets have remained non-performing and the "realisability" of the dues, while continuing to apply existing rules for classifying non-performing assets.
While the draft norms on mergers and acquisitions are awaited from the RBI, the HDFC Bank management expressed confidence on the bank's ability to finance mergers and acquisitions in India.
On their future plans and the integration of artificial intelligence in work flows, the management said it intends to use AI to simplify processes and not to make decisions. The management also assured that there will be no lay-offs at the bank due to the increased use of AI in its processes. End
Reported by Krity Ambey and Aaryan Khanna
Edited by Rajeev Pai
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