HDFC Bank, ICICI Bank Q2 results: what NII, NIM and NPAs mean, simply
· 5 min read · Tryvest
Big banks have reported July-September results. What net interest income, margin, provisions and bad loans (NPAs) mean, using this season's numbers.
India's quarterly results season is in full swing, and banks are among the first big companies to report. Over the weekend of 17 October, HDFC Bank and ICICI Bank, the country's two largest private banks, published their numbers for July to September 2026, and Union Bank of India followed on 19 October. Bank results come with their own vocabulary: NII, NIM, provisions, gross and net NPA. This guide explains those words using this season's figures.
What happened
HDFC Bank reported a net profit of ₹19,510 crore for the quarter, 4.7% more than a year earlier. Its net interest income (NII) rose 9.7% to about ₹34,620 crore. Part of the reason profit grew slowly was lower treasury income: gains from trading bonds and other investments fell to about ₹780 crore from ₹2,390 crore a year ago. Its gross NPA ratio improved to 1.11% from 1.24% a year earlier. The bank also has a leadership change coming: Anup Bagchi is due to take over as MD and CEO from Sashidhar Jagdishan on 27 October.
ICICI Bank reported a standalone net profit of ₹14,843 crore, up 20.1%, with NII up 17.7% to ₹25,339 crore. Its loans grew 30% from a year earlier, or about 24% if you leave out loans funded by special foreign-currency deposits at its overseas branches. Its gross NPA ratio fell to 1.20% from 1.58% a year earlier, and its net NPA ratio to 0.30%.
Union Bank of India, a public sector bank, reported a standalone net profit of ₹5,537 crore, up about 30%, and NII up 20% to ₹10,582 crore. Its gross NPA ratio fell to 2.42% from 3.29% a year earlier.
The idea behind it: how a bank makes money
A bank's basic business is simple. It borrows money from savers, through savings accounts and fixed deposits, and pays them interest. It lends that money out as home loans, car loans, business loans and credit cards, and charges a higher interest rate. The gap between the two is the bank's main income. Here are the words you will meet in every bank result:
- Net interest income (NII): the interest a bank earns on loans and investments minus the interest it pays depositors. It is the bank's core income, a bit like a shop's sales minus the cost of the goods it sells. If you have ever used an EMI calculator, the interest part of each EMI is the bank's side of this sum.
- Net interest margin (NIM): NII shown as a percentage of the money the bank has lent and invested. It tells you how profitable each rupee of lending is. ICICI Bank's NIM was 4.18%, lower than 4.30% a year ago; the bank said more overseas assets and more retail term deposits, which cost more, played a part. When interest rates change, NIM is often the first number to move.
- Other income: fees (for cards, loans and processing), foreign exchange and treasury gains. Treasury gains can swing a lot from one quarter to the next, which is why analysts look at core income separately.
- Provisions: money a bank sets aside from its profit for loans that may not be repaid. Higher provisions reduce profit today but protect the bank later. ICICI Bank's provisions were ₹851 crore, lower than a year ago, which helped its profit grow faster than its NII.
- NPA (non-performing asset): a loan on which interest or principal has not been paid for more than 90 days. The gross NPA ratio is the share of all loans that have turned bad. The net NPA ratio is what is left after subtracting the provisions already made. A falling ratio means the loan book is getting healthier.
Why it matters for a beginner
Banks sit at the centre of the economy. When they lend more, it usually means people and businesses are borrowing to buy homes, cars and machines. When their bad loans fall, it shows borrowers are repaying on time. That is why bank results are watched as a health check on the wider economy, not just on the banks themselves.
Results also teach a useful habit: do not judge a company by one number. HDFC Bank's profit grew slowly partly because of lower treasury gains, a part of income that changes a lot, while its core NII still grew. Union Bank's profit grew quickly, but its gross NPA ratio is still about twice that of the two large private banks. Reading several lines together, as our lesson on reading financial statements shows, gives a fairer picture than a single headline.
One more point for savers: the health of a bank matters for your deposits too. In India, deposits in each bank are insured up to ₹5 lakh per depositor by DICGC, which our lesson on deposit insurance explains.
What to keep an eye on
- More results: many other banks and finance companies report their July-September numbers over the coming weeks. Compare the same few lines: NII growth, NIM, provisions and gross NPA.
- Standalone vs consolidated: a bank's own figures (standalone) differ from the group's figures (consolidated), which include subsidiaries such as insurance and fund houses. ICICI Bank's consolidated profit was ₹16,333 crore. Check which one a headline uses.
- Year-on-year vs quarter-on-quarter: most growth figures compare with the same quarter last year. That avoids seasonal effects, such as festive-season lending.
- HDFC Bank's CEO change takes effect on 27 October.
Key points
- NII is the gap between interest a bank earns and interest it pays; it is a bank's core income.
- NIM shows how much a bank earns on each rupee it lends and invests.
- Provisions are money kept aside for loans that may go bad; they reduce today's profit.
- Gross and net NPA ratios show how much of the loan book has turned bad. All three banks above reported lower ratios than a year ago.
- Read several numbers together, and check whether a figure is standalone or consolidated.
To see how companies report their numbers, start with our lesson on reading financial statements.