HDFC Bank, India’s largest private lender, has posted a robust performance for Q1 FY26. The bank recorded a 12.24% year-on-year rise in net profit, reaching ₹18,155 crore. Alongside, it announced a ₹5 special dividend and a much-anticipated 1:1 bonus issue for shareholders.
Strong Financial Performance Beats Estimates
HDFC Bank’s Q1 FY26 net profit beat analyst expectations by a solid margin. According to Moneycontrol, the Street had anticipated a profit of ₹17,385 crore. The bank outperformed with ₹18,155 crore.
Net interest income (NII) grew 5.4% YoY to ₹31,438 crore, just shy of the expected ₹31,885 crore. Total standalone income also saw a jump from ₹83,701 crore in Q1 FY25 to ₹99,200 crore this quarter.
Margins Under Pressure, But Stable
The core net interest margin (NIM) came in at 3.35%, slightly lower than 3.46% in Q4 FY25. This dip reflects a faster rise in deposit costs compared to asset repricing. Despite that, operational metrics stayed strong.
Operational Highlights and HDB Windfall
HDFC Bank booked a pre-tax gain of ₹9,128 crore from the IPO of HDB Financial Services. Following the public issue, HDFC Bank’s stake in HDB declined to 74.19% from 94.32% in the previous quarter.
The bank’s operating profit stood at ₹35,734 crore, while total provisions surged to ₹14,442 crore. These include ₹9,000 crore in floating provisions and ₹1,700 crore in contingent provisions, signaling prudent risk management.
Dividend and Bonus Issue Announced
To reward shareholders, HDFC Bank declared a ₹5 special interim dividend. Shareholders listed on the record date of July 25 will receive the payout on August 11.
Additionally, the board approved a 1:1 bonus share issue. This means every shareholder will receive one additional share for each share held. The record date for the bonus is August 27, pending regulatory approvals.
Steady Asset Quality and Deposit Growth
- Gross advances: ₹26.53 lakh crore (up 6.7% YoY)
- Total deposits: ₹27.64 lakh crore (up 16.2% YoY)
- CASA ratio: 33.9%, slightly lower than 38.2% YoY
The gross non-performing asset (GNPA) ratio stood at 1.40%, while the net NPA was 0.47%—both stable with a slight uptick compared to last year.
Insurance and Trading Income Jump
Other income rose sharply to ₹21,730 crore. It included:
- ₹75.9 crore from fees and commissions
- ₹16.3 crore from forex and derivatives
- ₹101.1 crore from trading gains
Insurance subsidiaries also made a notable contribution of ₹1,645 crore in profit before tax.
Capital and Return Ratios
The Capital Adequacy Ratio (CAR) improved to 19.88% from 19.33% YoY. The Return on Assets (ROA) remained steady at 0.48%, indicating efficient use of the bank’s asset base.
Market Reaction
Before the results announcement, HDFC Bank shares closed at ₹1,959 on the NSE, down 1.56%. With the announcement of dividends and bonus shares, investors are expected to respond positively in upcoming sessions.
Conclusion
HDFC Bank’s Q1 FY26 results reflect strong fundamentals and strategic gains, particularly from the HDB IPO. With a generous dividend and a 1:1 bonus share issue, the bank has reinforced investor confidence. Despite pressure on margins and CASA ratio, the overall outlook remains positive for the next quarter.
