HDFC Bank, one of India’s largest private-sector lenders, recently posted strong quarterly earnings for Q1FY26. The bank’s net profit surged by 12% YoY, reaching ₹18,155 crore. As a result, HDFC Bank’s share price increased by 2%, touching ₹1,998.75. With a series of attractive developments, including a bonus issue and dividend payout, the question remains: should you buy, sell, or hold HDFC Bank shares?
HDFC Bank’s Q1 Financial Performance Breakdown
HDFC Bank’s first-quarter results for FY26 have certainly impressed investors. The net profit increased by 12% compared to the same period last year, driven by a 6% rise in interest income. The bank’s core net interest income (NII) also rose by 5.4%. However, despite these positive figures, the bank did face some challenges, such as rising deposit costs, resulting in a slight dip in net interest margin (NIM).
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Key Financial Metrics
| Metric | Q1FY26 | Q1FY25 | YoY Growth |
| Net profit | ₹18,155 crore | ₹16,175 crore | 12% |
| Interest income | ₹77,470 crore | ₹73,100 crore | 6% |
| Net interest income (NII) | ₹31,438 crore | ₹29,837 crore | 5.4% |
| Operating expenses | ₹17,434 crore | ₹16,644 crore | 4.9% |
| Net interest margin (NIM) | 3.35% | 3.46% | -0.11% |
As shown in the table, the increase in net profit and interest income reflects HDFC Bank’s ongoing growth despite some challenges. However, the decline in NIM from 3.46% in Q4FY25 to 3.35% in Q1FY26 is something to monitor, as it indicates that deposit costs are rising faster than the yield on loans and investments.
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Bonus and Dividend Announcement: A Treat for Shareholders
HDFC Bank has also made some shareholder-friendly moves. The bank declared its first-ever bonus issue in a 1:1 ratio, meaning shareholders will receive one additional share for every share they hold. This announcement is a significant boost for current investors, as it doubles the bank’s paid-up share capital. The record date for the bonus issue is set for August 27, and shares are expected to be credited by September 18.
In addition to the bonus issue, HDFC Bank declared a special interim dividend of ₹5 per share for FY26. The record date for this dividend is July 25, and it will be paid on August 11. These measures are likely to appeal to investors looking for both capital gains and regular income from dividends.
Dividend and Bonus Details
- Dividend per share: ₹5
- Record date for dividend: July 25, 2025
- Dividend payment date: August 11, 2025
- Bonus ratio: 1:1 (one bonus share for every share held)
- Record date for bonus: August 27, 2025
- Shares credited by: September 18, 2025
Asset Quality and Provisions
While HDFC Bank’s overall financial performance remains robust, there has been a slight increase in asset quality concerns. The Gross Non-Performing Asset (NPA) ratio has risen to 1.40% from 1.33% in Q4FY25, and the Net NPA ratio increased to 0.47% from 0.43%. While this increase in NPAs is relatively small and still lower than industry averages, it’s important to keep an eye on this trend in the coming quarters.
Asset Quality Metrics
| Metric | Q1FY26 | Q4FY25 | Q1FY25 |
| Gross NPA ratio | 1.40% | 1.33% | 1.33% |
| Net NPA ratio | 0.47% | 0.43% | 0.44% |
Despite these slight increases in NPAs, HDFC Bank has maintained a strong provision buffer of ₹14,440 crore for Q1FY26, which includes floating provisions of ₹9,000 crore and additional contingent provisions of ₹1,700 crore.
Conclusion
Given the 12% YoY profit growth, bonus issue, and dividend payout, HDFC Bank is making a strong case for both current and potential investors. The increase in share price following the results indicates that investor confidence is high.
Despite a slight dip in NIM and some minor asset quality concerns, the overall financial strength and strategic moves like the bonus issue and dividend payout show that HDFC Bank is well-positioned for continued growth.
