Despite a notable increase in provisions during the quarter and a modest increase in net interest income (NII) due to muted loan growth, HDFC Bank, the largest private sector lender in India, reported a 12.2% year-over-year (Y-o-Y) increase in net profit to Rs 18,155 crore in the April-June quarter of the financial year 2025-26 (Q1FY26).
During the quarter, the bank's partial disinvestment in HDB Financial Services, a subsidiary, contributed to the net profit.
The selling of HDB Financial's shares resulted in a net gain of Rs 6,949.27 crore for it. During the quarter, its provisions increased to Rs 14,441 crore, comprising Rs 1,700 crore in extra contingent provisions and Rs 9,000 crore in floating provisions.
"In a credit environment that is still benign, the bank's credit performance across all segments stays consistent. The bank said in its statement on Saturday that it has deemed this a good time to strengthen its floating provisions, which serve as a countercyclical buffer to strengthen the balance sheet and are not tailored to any particular portfolio or set of expected risks.
The lender's net interest margin (NII) increased 5.4% year over year to Rs 31,438 crore during this time. The core net interest margin was 3.35 percent on total assets, which indicates that assets are repricing more quickly than deposits, compared to 3.46 percent for the previous quarter, which concluded on March 31, 2025.
For the first quarter of FY26, its other revenue (non-interest revenue) was Rs 21,730 crore. Gross non-performing assets (NPAs) at the end of Q1FY26 were 1.4%, down from 1.3% in Q4FY25, indicating a slight decline in the bank's asset quality.
Likewise, its net non-performing assets (NPAs) were 0.47 percent. Retail loans grew by 8.1% year over year, while total advances by 6.7% year over year to Rs 26.53 trillion. Corporate and other wholesale loans rose 1.7%, while loans to small and mid-market businesses jumped 17.1%.
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