HDFC Bank Q3 FY26: Profit up 11.5%, NIM steady

Results snapshot and why the quarter mattered

HDFC Bank reported a steady December 2025 quarter (Q3 FY26), with profit growth holding up even as margins remained below pre-merger levels. Standalone profit after tax rose 11.5% year-on-year to ₹186.5 billion. Standalone net revenue increased 8.9% year-on-year to ₹458.7 billion, supported by loan growth and a stable spread profile. Net interest income rose 6.4% year-on-year to ₹326.2 billion, while non-interest income was ₹132.5 billion. The quarter remained closely tracked because it came during the post-merger integration phase after absorbing the housing-heavy book.

Key profitability numbers in Q3 FY26

The bank reported profit before tax of ₹242.6 billion for the quarter ended December 31, 2025. Core net interest margin was 3.35% on total assets and 3.51% on interest-earning assets. The bank also reported operating expenses of ₹187.7 billion, and excluding an estimated ₹8.0 billion impact under the New Labour Code, expenses were ₹179.7 billion. Cost-to-income ratio for the core business was stated at 39.2%, indicating operating efficiency held up despite a competitive deposit environment.

Revenue mix: fees, trading gains, and other income

Non-interest income in the quarter was ₹132.5 billion. Fees and commissions were ₹92.3 billion, making them the largest component. Foreign exchange and derivatives revenue was ₹14.3 billion, and miscellaneous income was ₹16.6 billion. Net trading and mark-to-market gains increased to ₹9.3 billion from ₹0.7 billion in the year-ago period, providing a visible lift to reported other income.

Loan growth and deposits: funding profile stays in focus

As of December 31, 2025, gross advances were reported at ₹28,440 billion, up 11.9% year-on-year. Total deposits were ₹28,590 billion, up 11.5% year-on-year, keeping funding growth broadly aligned with loan expansion. Average deposits were reported at ₹27,500 billion, up 12.2% year-on-year, and the reported CASA ratio was in the 32% to 34% range in Q3 FY26. These metrics mattered because the post-merger period brought a tighter focus on deposit mobilisation and balance sheet calibration.

Product-wise advances: what grew into March 2026

The bank’s product-wise advances data shows that retail and wholesale both expanded into March 2026, while business banking and commercial transportation also grew steadily. Advances under management increased from ₹26,839 billion (Dec 2024) to ₹30,573 billion (Mar 2026). Over the same period, gross advances rose from ₹25,426 billion to ₹29,600 billion. Retail advances increased from ₹14,727 billion (Dec 2024) to ₹16,149 billion (Mar 2026), indicating continued growth even as the mortgage-heavy mix remained a key driver of overall yields.

Asset quality: GNPA stable at 1.24%

Gross NPA stood at 1.24% as of December 31, 2025, described as stable. Net NPA ratio was reported at 0.42% versus 0.46% a year earlier in the quarterly comparison shared. The quarter also cited provisions declining by about 10% year-on-year to ₹28.4 billion, attributed to a ₹10.4 billion contingent provision release. Credit cost was presented at 0.55% in the Q3 FY26 indicator set, while a separate financial metrics table showed credit costs net of recoveries as 0.41% (marked with an asterisk) at December 31, 2025.

Margins and cost of funds: the post-merger reset

HDFC Bank’s net interest margins were described as settling in the 3.3% to 3.5% range as of early 2026. This was positioned as lower than the pre-merger 4.1%, attributed to a higher cost of inherited HDFC Ltd borrowings and a higher share of lower-yielding mortgage loans. The bank’s financial metrics table showed yield on assets easing from 8.4% (31-Mar-25) to 7.8% (31-Dec-25 and 31-Mar-26). Over the same dates, cost of funds (including shareholders’ funds) moderated from 4.9% to 4.5% and then 4.4%, while net interest margin on assets stayed at 3.5% and then 3.4%.

Loan-to-deposit ratio: peak to moderation

Loan-to-deposit ratio (LDR) was described as peaking at 110% post-merger and moderating to about 96% by March 2026, aided by deposit mobilisation. Separately, management commentary in the same broader results pack referenced a target of 95% by FY26 end and low 90s by FY27. For analysts, this matters because it frames the trade-off between growth and funding costs, especially when deposit pricing is competitive.

Market check: stock price and near-term reaction

On January 19, 2026, the stock opened at ₹935.90 and touched an intraday low of ₹919.50 as of 11:06 AM on the NSE, as per the provided market snapshot. Ahead of the quarterly results, shares were reported to have risen 0.55% to ₹930.55 on the NSE. The one-year return figure in the same dataset was 13.7%, with a comparison noting the Nifty 50 returned less than 11% over that period.

Why these numbers matter for investors

The quarter reinforced a pattern of stable profitability with controlled asset quality metrics, even with a lower margin regime. Stronger trading gains and steady fee income helped support total revenue as core NIM stayed around 3.35% on assets. The product-wise advances data into March 2026 showed continued expansion in retail and wholesale, alongside growth in business banking and commercial transportation. At the same time, the margin discussion and the yield and cost-of-funds trends highlighted that the post-merger mix shift remains central to earnings interpretation.

Conclusion

HDFC Bank’s Q3 FY26 results showed 11.5% year-on-year profit growth, stable GNPA at 1.24%, and continued growth in advances under management into March 2026. The key monitorables remain margin stabilisation and further LDR improvement in line with the stated targets. Investors are likely to track the next updates for confirmation on deposit momentum, credit costs, and the pace of margin recovery over the coming quarters.