HDFC Bank Q1FY26 Results: Margin Drops, But Brokerages See Upside

HDFC Bank Q1FY26 results show a 12.2% rise in standalone net profit at Rs 18,155 crore and a 1.31% fall in consolidated net profit to Rs 16,258 crore. Brokerage Nuvama maintains a 'Buy' rating and raises its target price to Rs 2,270. The bank's margins slipped due to faster repricing of EBLR-linked loans and slower decline in cost of funds, but its asset quality remains best-in-class.

HDFC Bank reported a significant increase in its standalone net profit for the first quarter of FY26, rising by 12.2% to Rs 18,155 crore [1]. This growth was driven by a 5.4% jump in standalone net interest income (NII) to Rs 31,438 crore [1]. However, the bank's consolidated net profit declined by 1.31% to Rs 16,258 crore [1].

The bank's performance was supported by strong growth in other income, which doubled to over Rs 20,000 crore from just over Rs 10,000 crore in the same quarter last year [1]. The bank's total income for the June quarter rose to Rs 99,200 crore from Rs 83,701 crore in the year-ago period [1]. The bank's total expenditure stood at Rs 63,467 crore against Rs 59,817 crore in the same period of the previous fiscal year [1].

On the asset quality front, the bank’s gross non-performing assets (GNPA) ratio rose slightly to 1.4% from 1.33% in the previous quarter, while the net NPA stood at 0.47%, up from 0.43% sequentially [1]. The bank set aside Rs 14,442 crore in provisions, a sharp jump from Rs 2,602 crore in Q1FY25 [1].

The bank announced a special interim dividend of Rs 5 per equity share and a 1:1 bonus issue. The record date for the dividend is July 25, and the payout will be made on August 11, 2025. The record date for the bonus shares is August 27, 2025 [2].

Brokerage Nuvama maintains a 'Buy' rating and raised its target price to Rs 2,270. The bank's margins slipped due to faster repricing of EBLR-linked loans and slower decline in cost of funds, but its asset quality remains best-in-class [3].

References:
1. [1] https://www.financialexpress.com/business/industry-hdfc-bank-net-profit-rises-12-2-per-cent-in-q1-on-strong-other-income-nii-grows-5-4-per-cent-3920093/
2. [2] https://m.economictimes.com/markets/stocks/earnings/hdfc-bank-q1-results-pat-rises-12-yoy-to-rs-18155-crore-bank-announces-11-bonus-issue/amp_articleshow/122780608.cms
3. [3] https://www.newsbytesapp.com/news/business/hdfc-bank-reports-12-rise-in-q1-profit-announces-bonus/story