HDB Financial Services second quarter results: Profit down 2% YoY to Rs 581 crore, NII up 20%

HDB Financial on Wednesday reported a marginal 2% decline in net profit at Rs 581 crore in the July-September quarter. A year ago it was Rs 591 crore.

Operating revenues rose 13% year-on-year (year-on-year) to Rs 4,545 crore.

Net interest income (NII) showed an increase of 20% year-on-year to Rs 2,192 crore for the quarter, compared to Rs 1,833 crore in the year-ago period.

The NII was supported by higher revenues and efficient financing. Net interest margin (NIM) improved to 7.9%, compared to 7.5% in the same period last year.

Loan book

The company’s gross loan portfolio increased 13% year-on-year and 2% sequentially to Rs 1.11 lakh crore as of September 2025. Secured loans constituted 73% of the total portfolio, with continued growth in the corporate lending, consumer finance and asset finance segments. Disbursements stood at Rs 15,599 crore, up marginally by 2.8% quarter-on-quarter (QoQ).

Asset quality shows a slight deterioration

The company’s gross non-performing assets (NPA) ratio rose to 2.81% from 2.56% in the previous quarter, while net NPA stood at 1.27%. Provision coverage for assets in phase 3 was robust at 54.7%. However, credit costs rose to Rs 748 crore from Rs 431 crore a year ago. The higher provisions caused pre-tax profit for lending to decline 3.3% year-on-year to Rs 753 crore. For the first half of FY26, profit stood at Rs 1,149 crore, compared to Rs 1,173 crore a year ago.

Returns moderately but remains healthy

The lender’s return on assets (RoA) was 1.9%, while return on equity (RoE) was 12.2%. On an adjusted basis – excluding the previous quarter’s IPO proceeds – the RoA would have been around 2.0%.

Healthy capital base

HDB maintained a comfortable capital position, with a Capital Adequacy Ratio (CRAR) of 21.82% as of September 2025, supported by a well-diversified financing mix. About 40% of the loans came from bank loans, 37% from non-convertible bonds and the rest from other instruments, including external lending and securitization.

Branch network

The company’s network expanded to 1,749 locations in 1,157 cities, serving more than 21 million customers. Management said it remains focused on cautious growth, strengthening its secured portfolio and leveraging technology and data analytics to manage risk.

On Wednesday, HDB Financial shares closed 0.3% higher at Rs 742.4 on NSE.