The March 2026 quarter results of HDFC Bank were keenly awaited in a bid to understand its core performance at a time when the broader Indian economy has been reeling from the impact of the US / Israel – Iran war.
In addition, shareholders are awaiting more clarity from the largest private sector bank with regards to the recent resignation of Atanu Chakraborty on March 18, as the part-time chairman and independent director of the bank with immediate effect.
The HDFC Bank stock ended 0.6% higher at Rs 800 on Friday, and the stock is hovering above its 52-week low of Rs 726.75 that was reached on April 2.
Now, let’s take a look at the Q4 results of the bank.
March 2026 quarter – Strong growth in HDFC Bank’s core operations
| March 2026 quarter | Percent change (y-o-y) |
| Advances / Loan growth | 12.1% |
| Deposit growth | 14.4% |
With regard to the key operational parameters, the bank has attempted to build on the momentum from the earlier quarter – for instance, credit growth was 12.1% y-o-y to Rs 29.37 lakh crore in the March 2026 quarter. The largest private sector bank saw strong demand from small and mid-market loans that grew by 17.2% y-o-y and business banking that grew by 20% y-o-y in the fourth quarter of FY26.
The March quarter is typically a busy / peak season for credit, with individuals, small and large companies borrowing funds heavily before the close of the financial year.
Credit growth is an operational parameter of a bank that is keenly tracked, and investors have been keenly following this metric of HDFC Bank.
Since its merger in July 2023, HDFC Bank has been cautious in growing its loan book, with its credit-to-deposit ratio well above 90%, to the disappointment of shareholders and Dalal Street.
For perspective, HDFC Bank had grown its loan book barely 5.4% y-o-y to Rs 26.2 lakh crore in the March 2025 quarter.
However, in the recent credit peak season, HDFC Bank had also shown double-digit loan growth — its loan book in the December 2025 quarter grew by 12% y-o-y to Rs 28.21 lakh crore. The third quarter of a financial year is also a peak credit season for banks.
Of equal importance, is HDFC Bank’s deposits grew 14.4% y-o-y to Rs 31.05 lakh crore in Q4FY26, with the bank reporting strong growth in time deposits, largely fixed deposits.
Deposits form the basis of extending credit for a bank, short and long-term to clients, and in the case of HDFC Bank, a strong and sustained growth in deposits remains key to bringing down its credit-to-deposit ratio. HDFC Bank had a credit-to-deposit ratio of nearly 94.6% in Q4FY26.
In the December 2025 quarter, HDFC Bank had grown its deposits by 11.7% y-o-y to Rs 28.6 lakh crore, with its credit-to-deposit ratio of nearly 98.6 % in the quarter under review.
Managing NIM pressure – expanding loans to smaller enterprises
Net Interest Margin (NIM) is another key operational metric tracked by investors. For HDFC Bank, its NIM was 3.53% on interest earning assets in the March 2026 quarter as against 3.7% a year earlier.
Loans to smaller enterprises enable banks to earn a higher rate of interest on loans / credit vis-a-vis loans to top rated corporates, and help them manage the pressure on NIMs. The RBI has taken several steps to boost lending in the broader banking system and this includes the cut in repo rates in early December 2025. This in turn has put a temporary pressure on NIMs of banks, like HDFC Bank.
Strong asset quality
Asset quality of HDFC Bank has been quite stable — its % of net NPAs to net advances was 0.38% in the March 2026 quarter as against 0.43% a year earlier. HDFC Bank has one of the lowest NPA ratios in the domestic banking industry and it is often viewed as a benchmark for other banks.
Its provisions has also come down by nearly 18% y-o-y to Rs 2,609.6 crore in the March 2026 quarter, and it helped the Mumbai-based bank’s standalone net profit to rise 9% y-o-y to Rs 19,221 crore in the quarter under review.
HDFC Bank’s core banking operations are reflected in its standalone results.
HDFC Bank’s Return on Assets (RoA) – setting standards for banking sector
Apart from strong loan growth, HDFC Bank has kept a tight check on its costs – with its cost-to-income ratio at 39.9% in the March 2026 quarter and broadly in tune with a year earlier.
A part of this could be attributed to increased automation and use of AI-related technology in daily operations, which helps HDFC Bank to keep operational costs under check. HDFC Bank in its investor presentation has not provided employee numbers.
As a result, HDFC Bank’s return on assets (average) – not annualized was 0.48% in the March 2026 quarter, and for FY26 it was 1.94%.
HDFC Bank along with smaller rival, Kotak Mahindra Bank, have one of the highest Return on Assets (ROA) in the banking industry, over the past several quarters. Kotak Mahindra Bank will declare its results on May 2.
Funding future growth – raising up to Rs 60,000 crore via bonds
The bank is seeking shareholder approval to raise Rs 60,000 crore for funding infrastructure sector loans. The above development comes at a time when the government has been encouraging India Inc to expand their capacity in a range of sectors including airports, communication and transport along with steel and cement via numerous policy measures. For instance, RBI’s recent policy measures have helped to lower cost of borrowing for companies along with several measures taken by the central government to ease the compliance burden.
Various domestic and international bodies have lowered the growth forecast for the Indian economy to 6% to 6.5% for FY27, given the Middle East war. Investors will be watching the implications from the above forecast on the various operational parameters of HDFC Bank and other leading banks, including loan growth, NIM, NPAs and RoA.
Of equal importance will be managing the cost efficiency ratio and it will play a key role in driving profit growth for HDFC Bank, going forward.
HDFC Bank has also appointed a domestic law firm and an international law firm following the recent resignation of its chairman. Investors will also be keeping a close eye on updates from these law firms for corporate governance standards at the largest private sector bank
HDFC Bank vs Kotak Mahindra: A Valuation Comparison
Is the HDFC Bank stock cheap??
| Bank Name | Price-to-(standalone) book value |
| HDFC Bank | 2.2 times |
| Kotak Mahindra Bank | 3.0 times |
The HDFC Bank stock ended 0.6% higher at Rs 800 on Friday, and the stock is hovering above its 52-week low of Rs 726.75 that was reached on April 2.
On the preferred valuation matrix, price to (standalone) book value, the stock trades at nearly 2.2 times. HDFC Bank’s core banking operations are reflected in its standalone quarterly results.
Over the past 5 years, the HDFC Bank stock has traded at a price to (standalone) book value between 2.1 times and 4.8 times
Kotak Mahindra Bank trades at on a price-to-(standalone)-book value of 3 times. Over the past 5 years, Kotak Mahindra Bank has traded at a price-to- (standalone) book value between 3.1 times and 7.1 times.
HDFC Bank is currently trading at lower end of its price-to-(standalone) book value and at much lower valuations to Kotak Mahindra Bank. Investors can put HDFC Bank on their watch list, and see if it performs to various operational parameters as well as keep an eye on developments related to corporate governance.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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