HDFC Bank, on July 19, reported a decline in consolidated net profit to Rs 16,258 crore in Q1 FY26, down from Rs 16,475 crore a year ago, despite a one-time pre-tax gain of Rs 9,128 crore from the IPO of its subsidiary, HDB Financial Services.
The subdued bottom-line performance came as the bank made total provisions of Rs 14,442 crore, including Rs 9,000 crore in floating provisions and Rs 1,700 crore in contingent buffers, indicating caution over potential asset quality pressure.
Following the IPO of its subsidiary HDB Financial Services, HDFC Bank’s stake in the company declined to 74.19 percent as of June 30, 2025, from 94.32 percent at the end of the previous quarter.
The bank's standalone net interest income (NII) expanded 5.4 percent to Rs 31,438 crore in Q1 FY26.
Core net interest margin (NIM) for the quarter stood at 3.35 percent, down from 3.46 percent in Q4 FY25, reflecting faster repricing of deposits compared to assets.
Operating expenses rose 4.9 percent year-on-year to Rs 17,434 crore in Q1 FY26, compared to Rs 16,621 crore in Q1 FY25. This includes Rs 6,158 crore in employee costs and Rs 11,276 crore in other expenses.
The cost-to-income ratio, excluding gains from the HDB Financial IPO, stood at 39.6 percent.
Total standalone income rose to Rs 99,200 crore from Rs 83,701 crore in Q1 FY25.
Gross advances as of June 30, 2025 stood at Rs 26.53 lakh crore, up 6.7 percent year-on-year, while total deposits rose 16.2 percent to Rs 27.64 lakh crore.
The CASA ratio stood at 33.9 percent, down from 38.2 percent in Q1 FY25, with savings account deposits at Rs 6.39 lakh crore and current account deposits at Rs 2.98 lakh crore.
Capital adequacy ratio (CAR) improved to 19.88 percent from 19.33 percent in the same quarter last year.
On the consolidated side, total income rose to Rs 1.33 lakh crore from Rs 1.17 lakh crore a year ago.
Other income jumped sharply to Rs 21,730 crore, supported by gains from the HDB IPO. This included Rs 75.9 crore from fees and commissions, Rs 16.3 crore from forex and derivatives, and Rs 101.1 crore from trading and mark-to-market gains.
Insurance subsidiaries contributed Rs 1,645 crore in profit before tax.
The gross non-performing asset (GNPA) ratio stood at 1.40 percent, while the net NPA ratio was 0.47 percent as of June 30, both slightly higher than the year-ago levels. Return on assets was steady at 0.48 percent.
Return on assets stood at 0.48 percent in Q1 FY26, unchanged from the same period last year.
On the operational front, Operating profit stood at Rs 35,734 crore, while provisions surged to Rs 14,442 crore, including Rs 9,000 crore in floating provisions and Rs 1,700 crore in contingent provisions.
HDFC Bank’s board also approved a special interim dividend of Rs 5 per share and a 1:1 bonus issue. The special interim dividend will be paid to shareholders whose names appear on the register as of July 25, and the payment is scheduled for August 11.
The bonus issue, subject to shareholder and regulatory approvals, will entitle shareholders to one bonus share for every one held, with the record date set as August 27.
According to a Moneycontrol poll, the Street had estimated a 7 percent YoY rise in NII to Rs 31,885 crore and a 7.4 percent rise in net profit to Rs 17,385 crore for the April-June quarter. Ahead of the results, on Friday, HDFC Bank shares fell 1.56 percent to end at Rs 1,959 on NSE.
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