HDFC Bank, India’s largest private-sector lender by market capitalization, reported higher-than-expected quarterly profit for the three months ended December 31, 2025, driven by strong loan growth and improving lending margins.

The Mumbai-based bank posted a standalone net profit of 186.53 billion Indian rupees ($2.06 billion), up 11.5% from 167.35 billion rupees a year earlier. Analysts had forecast a profit of 183.7 billion rupees, underscoring the bank’s robust financial performance.

Loan Growth and Net Interest Income

HDFC Bank’s loan portfolio grew 12% year-on-year, supported by increases in large corporate lending and small business loans. Strong credit growth contributed to a 6.4% rise in net interest income to 326.2 billion rupees, while the net interest margin (NIM) improved to 3.35%, up from 3.27% in the previous quarter.

The improvement in margins comes as the Reserve Bank of India (RBI) has lowered its benchmark interest rate by a cumulative 125 basis points since February 2025 to stimulate consumption and investment. Earlier in the year, NIMs were squeezed as loan rates repriced faster than deposit costs.

Deposit Base and Post-Merger Strength

Following its merger with parent HDFC Ltd two years ago, HDFC Bank has focused on strengthening its deposit base, which grew 11.6% year-on-year in the quarter. The combination of rising deposits and robust loan growth has reinforced the bank’s funding stability.

Asset Quality Remains Stable

The lender’s asset quality remained steady, with a gross non-performing asset (NPA) ratio of 1.24%, unchanged from the previous quarter. Provisions for potential loan losses and other contingencies declined 10% from a year earlier to 28 billion rupees, reflecting stable credit conditions.

Outlook

HDFC Bank’s strong quarterly performance, supported by expanding lending margins, rising deposits, and stable asset quality, positions the bank to continue growth in both corporate and retail lending segments. Analysts view the results as a positive signal for India’s private banking sector, especially in the context of RBI’s accommodative monetary policy and continued economic expansion.