Why Did HDB Financial Services Experience a 1.5% Drop in Q2 Profit?
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Synopsis
HDB Financial Services' net profit fell by 1.5% in Q2 FY26, totaling Rs 581 crore. This decline contrasts with a significant revenue increase driven by loan growth. The company also announced a dividend of Rs 2 per share and reported a notable rise in loan loss provisions. Explore the details of this financial update.
Key Takeaways
- Net profit decreased by 1.5% to Rs 581 crore.
- Total revenue increased by 13% to Rs 4,545 crore.
- Interest income rose by 13% annually.
- Loan losses and provisions surged by 74% to Rs 748 crore.
- Declared interim dividend of Rs 2 per share.
Mumbai, Oct 15 (NationPress) HDB Financial Services, a subsidiary of HDFC Bank, has disclosed a 1.5% decrease in its net profit, amounting to Rs 581 crore for the second quarter of the current financial year (Q2 FY26), according to an exchange report released on Wednesday. The non-banking financial institution had recorded a net profit of Rs 591 crore during the same period last year (Q2 FY25).
Despite the profit decline, the company’s total revenue for the quarter surged by 13% to Rs 4,545 crore, up from Rs 4,007 crore in Q2 FY25, thanks to steady growth in loan disbursements. Furthermore, interest income also saw a 13% annual increase, reaching Rs 3,887 crore.
The profit margin was negatively influenced by a significant 74% rise in loan losses and provisions, totaling Rs 748 crore during the quarter.
Additionally, the company has set October 24 as the record date and announced an interim dividend of Rs 2 per share for FY26.
During this quarter, the pre-provisioning operating profit stood at Rs 1,530 crore, an increase of 24.4% compared to Rs 1,230 crore for the quarter ending September 30, 2024. In contrast, loan losses and provisions reached Rs 748 crore for Q2 FY26, up from Rs 431 crore in the previous year’s quarter.
On the stock market, shares of HDB Financial Services closed 0.3% higher at Rs 742.4 each on the NSE on Wednesday.
HDB Financial Services Limited (HDBFS) is a non-deposit-taking non-banking finance company that provides a broad spectrum of loan products to individuals, emerging businesses, and micro enterprises. Founded in 2007 as a subsidiary of HDFC Bank Limited, HDBFS is classified as an upper-layer NBFC by the RBI.
In related news, its group company HDFC Life Insurance reported a 3.2% year-on-year increase in profit after tax (PAT) to Rs 449 crore for the same quarter, with net premium income rising by 13% to Rs 18,871 crore. On a half-year basis, HDFC Life’s PAT grew by 9% to Rs 994 crore.
Point of View
It's crucial to note that while HDB Financial Services faced a profit decline, the 13% revenue growth reflects resilience in its core operations. This duality of rising revenues amidst profit challenges showcases the complexities within the financial services sector. Stakeholders should remain informed about these dynamics as they navigate the evolving market landscape.
NationPress
15/10/2025
Frequently Asked Questions
What caused the decline in HDB Financial Services' profit?
The decline was primarily due to a significant increase in loan losses and provisions, which surged by 74% to Rs 748 crore.
How did HDB Financial Services' revenue perform in Q2 FY26?
Despite the profit drop, the company experienced a 13% increase in overall revenue, reaching Rs 4,545 crore.
What is the interim dividend declared by HDB Financial Services?
The company declared an interim dividend of Rs 2 per share for FY26, with October 24 set as the record date.
How did HDB Financial Services' stock perform recently?
The shares of HDB Financial Services closed 0.3% higher at Rs 742.4 each on the NSE.
What other financial performance metrics were reported?
The pre-provisioning operating profit increased by 24.4% to Rs 1,530 crore compared to the previous year.
