HDFC Bank Q3 Results: Profit Jumps 11.5% to ₹18,654 Crore

Introduction

HDFC Bank, India's largest private sector lender, announced its financial results for the third quarter ending December 31, 2025, on Saturday, January 16, 2026. The bank posted a robust 11.5% year-on-year increase in net profit, surpassing market estimates. However, its core income growth was slightly subdued, narrowly missing analyst forecasts. The results highlight a period of steady business growth, stable asset quality, and prudent provisioning, providing key insights into the bank's health and operational efficiency in the current economic landscape.

Profitability and Core Income

The bank's net profit for the December quarter stood at ₹18,654 crore, a significant 11.5% rise from the corresponding period last year. This performance was stronger than anticipated, exceeding the CNBC-TV18 poll estimate of ₹17,968 crore. The strong bottom-line growth underscores the bank's ability to manage costs and drive profitability effectively.

Net Interest Income (NII), which is the difference between interest earned and interest expended, grew by 6.4% YoY to ₹32,615 crore from ₹30,653 crore in Q3 FY25. While this indicates positive growth in the bank's core lending operations, the figure fell slightly short of the consensus estimate of ₹32,762 crore. The bank's core net interest margin (NIM) stood at 3.35% on total assets.

Business Growth and Expansion

HDFC Bank demonstrated strong momentum in business expansion, with both its loan book and deposit base recording double-digit growth. Gross advances surged by 11.9% YoY, reaching ₹28.44 lakh crore as of December 31, 2025, up from ₹25.42 lakh crore a year earlier. This growth was broad-based, fueled by demand across retail, MSME, and corporate loan segments.

On the liability side, total deposits increased by 11.5% YoY to ₹28.59 lakh crore from ₹25.63 lakh crore in the previous year. This consistent growth in the deposit base is crucial for maintaining a healthy funding profile and supporting the expansion of the loan portfolio.

Asset Quality Assessment

Despite concerns in the broader market, HDFC Bank's asset quality remained stable on a sequential basis. The Gross Non-Performing Assets (GNPA) ratio was flat at 1.24% of gross advances. Similarly, the Net Non-Performing Assets (NNPA) ratio held steady at 0.42%.

In absolute terms, however, there was a slight increase. Gross NPAs stood at ₹35,179 crore, compared to ₹34,289 crore in the preceding quarter. Net NPAs rose to ₹11,981.8 crore from ₹11,447.3 crore. This marginal uptick in absolute numbers while ratios remain stable suggests that new asset creation is keeping pace with the slippages.

Provisions and Prudence

The bank's provisions for the quarter were reported at ₹2,837.9 crore. This marks a significant reduction compared to both the previous quarter's ₹3,500.5 crore and the ₹3,153.9 crore provisioned in the same quarter last year. The lower provisioning reflects the bank's confidence in its asset quality and risk management framework, which in turn contributed positively to the net profit.

Key Financial Metrics (Q3 FY26)

Management Update: Executive Director's Departure

In a significant development, HDFC Bank informed the exchanges that Executive Director Bhavesh Zaveri has requested not to seek re-appointment. Zaveri, whose tenure is set to end on April 18, 2026, intends to explore opportunities outside the banking sector. Accordingly, he will retire from his position on that date. This marks a key change in the bank's senior leadership.

Market Reaction and Analyst Outlook

Following the announcement, the market showed a cautiously optimistic response. HDFC Bank's shares closed the session prior to the announcement at ₹930.55 apiece, marking a gain of 0.55%. Over the past year, the stock has delivered a return of 13.7% to its investors.

Analysts view the results as a sign that merger-related challenges are largely resolved. Gurmeet Chadha of Complete Circle noted that the bank is now on a growth path, with an improvement in net interest margins. Asutosh Mishra of Ashika Stock Broking highlighted the bank's guidance for accelerated growth from FY27 onwards, with a focus on balancing deposit and credit growth in the current year.

Conclusion

HDFC Bank's third-quarter results present a picture of resilient profitability and sustained business growth. The bank successfully navigated the operating environment to deliver a profit that beat expectations, supported by healthy loan and deposit growth. While the NII growth was modest and absolute NPA figures saw a slight increase, the stability in asset quality ratios and reduced provisioning are positive indicators. Investors will continue to monitor the bank's net interest margins and its ability to sustain asset quality in the coming quarters as it solidifies its market-leading position.