HDFC Bank Q1 FY26 Profit Jumps 12.2%; Board Approves 1:1 Bonus Shares and ₹5 Interim Dividend

HDFC Bank, India’s largest private sector lender by market capitalization, started the financial year strongly, posting a 12.2% year-on-year (YoY) rise in standalone net profit for the first quarter of FY26 (April-June 2025). The bank reported a standalone net profit of ₹18,155 crore, compared to ₹16,175 crore in the same quarter last year (Q1 FY25). The robust results highlight the bank’s sustained growth momentum despite a challenging macroeconomic environment.

Strong Q1 Performance Backed by Robust Non-Interest Income

The profit growth was driven by a significant increase in non-interest income, which surged 103.7% YoY to ₹21,730 crore, fueled by strong treasury gains, fee-based revenues, and a one-off gain of ₹9,128 crore from the HDB Financial Services IPO stake sale. Net interest income (NII), the core income from lending operations, grew by 5.4% YoY, reaching ₹31,438 crore, supported by loan book expansion and controlled deposit costs. However, the net interest margin (NIM) slightly declined to 3.35% from 3.46% in Q4 FY25 due to faster repricing of deposits.

The quarter saw a sharp rise in provisions and contingencies, which increased 455% YoY to ₹14,442 crore from ₹2,602 crore in Q1 FY25. The bank clarified that this spike, including ₹9,000 crore in floating provisions and ₹1,700 crore in contingent provisions, was precautionary to build a counter-cyclical buffer against potential macroeconomic uncertainties. This reflects HDFC Bank’s conservative and prudent risk management approach.

Shareholders Rejoice as Bank Announces 1:1 Bonus and ₹5 Interim Dividend

In a move that delighted shareholders, the bank’s board approved a 1:1 bonus share issuance, the first in its history. Shareholders will receive one additional share for every share held, effectively doubling their shareholding without additional investment. The record date for the bonus shares is yet to be finalized, pending shareholder and regulatory approvals, with the process expected to be completed in the coming months.

Additionally, the board declared a special interim dividend of ₹5 per equity share (500% on a ₹1 face value), with the record date set for July 25, 2025. Dividend payments are scheduled to be made by August 11, 2025, underscoring the bank’s strong capital position and commitment to rewarding shareholders.

The bank’s lending segment performed steadily, with total advances under management growing 8.0% YoY to ₹27.8 lakh crore as of June 30, 2025, from ₹25.75 lakh crore a year earlier. Growth was supported by a strategic focus on diversifying the loan portfolio, particularly in lending to Micro, Small, and Medium Enterprises (MSMEs), though specific growth figures for this segment were not disclosed.

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On the asset quality front, gross non-performing assets (GNPA) rose marginally to ₹30,731 crore, translating to a GNPA ratio of 1.39%, up slightly from 1.33% in the previous quarter. Net non-performing assets (NNPA) remained stable at 0.39%, reflecting continued discipline in credit monitoring and recoveries. Excluding the agricultural portfolio, the core asset quality remained robust.

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Despite the strong earnings report, HDFC Bank shares fell nearly 1.5% in trading following the announcement, closing at approximately ₹1,957.40 per share. Market analysts attribute this correction to the high provisioning and cautious outlook, though the bank’s fundamentals remain solid, with a positive long-term growth trajectory.

The bank’s total market capitalization remains around ₹15 lakh crore, reinforcing its leadership in the Indian banking sector. The bonus share and interim dividend announcements signal management’s confidence in the bank’s financial health and future prospects.

In summary, HDFC Bank’s Q1 FY26 results demonstrated resilient profitability, stable asset quality, and a strong commitment to shareholder value. With robust contributions from both interest and non-interest income and a conservative risk management approach, the bank is well-positioned to navigate evolving market conditions while sustaining its growth momentum.

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