Mumbai: HDFC Bank, India’s largest private sector lender, has announced its financial results for the first quarter of FY26, reporting a strong performance despite some pressure on asset quality. The bank posted a profit after tax (PAT) of ₹18,115 crore, marking a 12.24% year-on-year increase over ₹16,174.75 crore recorded in the same quarter of the previous fiscal. This demonstrates the bank’s continued ability to grow profitably in a challenging macroeconomic environment.
The growth in PAT came even as the bank booked a one-time gain of ₹9,128 crore from the initial public offering (IPO) of its subsidiary HDB Financial Services. However, as a result of the IPO, HDFC Bank’s stake in HDB Financial Services came down to 74.19% as of June 30, 2025, from 94.32% in the previous quarter, reflecting the partial divestment of its holding in the subsidiary.
Strong Loan Growth Across Sectors
The bank’s loan portfolio continued to perform strongly, with healthy demand observed across retail, corporate, and SME segments. Management attributed this performance to a supportive macroeconomic environment, higher consumption demand, and stable credit quality in most sectors. Advances to priority sectors also grew at a steady pace, further diversifying the loan book.
The bank emphasized that despite growing its advances, it remains cautious about rising risks in certain sectors and hence decided to bolster its balance sheet strength through proactive provisioning.
Significant Provisions to Strengthen Balance Sheet
During the quarter, HDFC Bank made floating provisions of ₹9,000 crore and additional secured provisions of ₹1,700 crore, taking the total provisions for the quarter to nearly ₹10,700 crore. Importantly, these provisions were not made against any specific account or stressed loan, but as a prudent measure to strengthen the bank’s financial buffers against future uncertainties in the credit cycle.
Management reiterated its conservative approach to risk management, noting that such provisions provide flexibility and resilience in times of stress, ensuring the bank’s long-term stability.
Bonus Issue and Dividend
Reflecting confidence in its financial strength and commitment to shareholder returns, the board of directors approved a bonus issue in the ratio of 1:1, meaning shareholders will receive one bonus share for every fully paid-up share held. In addition, the board declared a dividend of ₹5 per share, in line with the bank’s consistent dividend payout history.
These corporate actions underscore the bank’s healthy capital position and its ability to reward shareholders while continuing to invest in growth.
HDFC Bank Q1 Performance: FY25 vs FY26
| Metric | Q1 FY26 | Q1 FY25 | Change |
| PAT | ₹18,115 crore | ₹16,174.8 crore | 12.2% ↑ |
| NII | ₹31,438 crore | ₹29,837.1 crore | 5.4% ↑ |
| PPOP | ₹35,734 crore | ₹23,884.6 crore | 49.6% ↑ |
| Gross NPA (%) | 1.40% | 1.33% | 7 bps ↑ |
| Net NPA (%) | 0.47% | 0.43% | 4 bps ↑ |
- PAT grew by 12.2% year-on-year, demonstrating strong profitability even amid rising provisions.
- Net Interest Income (NII) rose by 5.4%, supported by loan book growth and steady net interest margins.
- Pre-Provision Operating Profit (PPOP) surged by a robust 49.6%, reflecting operational efficiency and improved cost-to-income ratio.
- Asset quality remained largely stable, with a minor increase in Gross NPA by 7 basis points to 1.40% and Net NPA by 4 basis points to 0.47%.
- Strong capital adequacy enabled the bank to announce a 1:1 bonus issue and ₹5 per share dividend.
Management Decision
In its statement, the bank’s management noted that the Indian economy remains resilient despite global headwinds, and credit demand continues to remain healthy. They also highlighted that the bank’s digital initiatives and focus on customer-centric innovation have helped deepen customer relationships and enhance operational efficiency.
However, management cautioned about the potential risks of rising interest rates and geopolitical uncertainties, which may weigh on asset quality and loan demand in specific segments. The higher provisions this quarter reflect the bank’s proactive stance in preparing for such risks.
Outlook of HDFC Bank.
Analysts believe HDFC Bank’s Q1 FY26 performance reinforces its position as the market leader in the Indian banking sector. Its ability to grow profitably while maintaining a conservative approach to risk management and rewarding shareholders bodes well for its long-term prospects.
The bonus issue and dividend will likely boost investor sentiment, while the bank’s focus on digital transformation and expanding its footprint in semi-urban and rural markets is expected to drive future growth.