National Housing Bank Reports 15% Decline in Q2FY26 Net Profit to ₹417 Crore

National Housing Bank (NHB) has reported a 15 per cent year-on-year decline in its net profit for the second quarter, coming in at ₹417 crore compared to ₹490 crore recorded in the corresponding period of the previous year. According to the financial data, the reduction in profitability was primarily influenced by a dip in net interest income alongside an increase in provisions.

Net interest income, defined as the difference between interest earned and interest expended, fell by about 16 per cent year-on-year to ₹594 crore, down from ₹705 crore. In contrast, other income—which includes profits on the sale of investments—increased to ₹13 crore from ₹2.28 crore in the year-ago period.

On the expenditure side, operating expenses dropped 23 per cent year-on-year to ₹27 crore, while tax outgo decreased by 16 per cent to ₹135 crore. However, provisions other than tax and contingencies saw a significant rise, jumping 170 per cent year-on-year to ₹27 crore.

The apex financial institution for housing reported a capital adequacy ratio of 46.43 per cent as of September-end 2026, compared to 47 per cent at the end of September 2025.

As of September-end 2026, the institution has maintained a 100 per cent provision of ₹9.09 crore against the non-performing account of Aviom India Housing Finance Pvt Ltd, pending the finalisation of its insolvency resolution process. Additionally, in compliance with RBI Project Finance Directions, 2025 regarding the deferment of the date of commencement of commercial operations, NHB maintained an additional specific provision of ₹0.15 crore for Maharashtra Housing Development Ltd starting from December 31, 2025, to September 30, 2026.

NHB also stated that it declared the Star Housing Finance Ltd loan account as fraud on July 24, 2026, due to irregularities in its conduct. The total outstanding balance for this account stood at ₹50.15 crore as of September 30, 2026. Under RBI guidelines requiring a 100 per cent provision across four quarterly instalments starting from June 2026, NHB provided ₹19.04 crore during the September quarter, bringing the cumulative provision to ₹40.07 crore. The remaining amount of ₹40.08 crore is scheduled to be provided in subsequent quarters.

"The financial performance of the National Housing Bank highlights the direct impact that rising provisions and fluctuating net interest margins can have on institutional profitability. For the broader financial and housing finance ecosystem, this underscores the critical importance of robust asset quality monitoring and strict adherence to regulatory compliance frameworks, especially when dealing with stressed assets and evolving RBI guidelines." — Dr. Shishir Gupta, Founder & CEO, StartupLanes