Earnings Outlook
HDFC Bank PAT growth seen steady; deposits, slippage in focus
This story was originally published at 09:10 IST on 15 January 2026
Register to read our real-time news.Informist, Thursday, Jan. 15, 2026
By Krity Ambey
NEW DELHI – HDFC Bank Ltd. is expected to report steady earnings growth for the December quarter, supported by improvement in loan disbursals and stable margins. However, brokerages flagged traction on deposits, a high credit-deposit ratio, and seasonal stress in farm-sector loans as key concerns.
The country's largest private-sector bank is seen reporting a 10% year-on-year rise in net profit to INR 183.96 billion for the December quarter, based on the average of estimates from 13 brokerage firms. The net profit estimates range from INR 175.60 billion by Nuvama Wealth Management Ltd. to INR 188.92 billion by Emkay Global Financial Services Ltd. The expectation of an 11% on-quarter rise in the bank's non-performing loan slippages likely underpins Nuvama's low estimate for net profit. Sequentially, the lender's bottom line is expected to be 1.3% lower in the reporting quarter if the profit aligns with consensus estimates.
Most brokerages have flagged concerns over slippages due to seasonal stress in agricultural loans and the Kisan Credit Card portfolio--a pattern typically seen in the December quarter--but, except Nuvama, none have given an estimate for slippage. Agricultural loans accounted for 24% of HDFC Bank's retail assets at the end of September.
HDFC Bank's gross non-performing assets ratio is expected to remain broadly stable, with only a marginal rise of up to 4 basis points, data collated from research reports shows. The bank had recorded a gross non-performing assets ratio of 1.24% at the end of the September quarter, up from 1.36% a year ago. Its net non-performing assets ratio was 0.42% as of Sept. 30.
The net interest income of the bank is likely to grow 6.4% on year to INR 326.19 billion for the December quarter, according to the average of estimates from 13 brokerages, with projections ranging from INR 319.90 billion estimated by ICICI Securities Ltd. to INR 343.40 billion estimated by Nirmal Bang Equities Pvt. Ltd. Sequentially, the net interest income is likely to be up 3.4%.
Most brokerages expect HDFC Bank's net interest margins to remain broadly stable compared to the trailing quarter, with some forecasting a marginal improvement of 3–6 bps in the December quarter. The bank's net interest margin had compressed 8 bps sequentially to 3.27% in the trailing quarter.
HDFC Bank's margin improvement is expected to be gradual, with the loan-deposit ratio, liquidity coverage ratio, and funding costs remaining primary focus areas. This aligns with the bank's own outlook on its net interest margin. After the September quarter earnings, the bank's management had said some pressure on margins could persist for the next 2–4 quarters as repricing of loans after the Reserve Bank of India's rate cuts is completed, while deposit rates were yet to be repriced. Since then, the RBI has cut the repo rate by another 25 bps, taking the cumulative rate cuts to 125 bps in 2025.
The bank's gross advances rose 11.9% on year to INR 28.45 trillion as on Dec. 31, provisional data released by the bank showed. Meanwhile, the lender's deposits were up 11.5% on year at INR 28.60 trillion at the end of December.
The bank's operating expenses are expected to grow by low single digits sequentially, while provisions are seen stable to lower sequentially, unlike the one-off jump in provisions seen in the June quarter. Provisions had jumped five-fold in the June quarter after the lender enhanced its floating provisions as a countercyclical buffer to make its balance sheet more resilient. Since then, provisions have normalised to INR 35 billion in the September quarter, up 30% on year, and analysts expect these to remain at the same level in the December quarter as well.
Overall, brokerages expect the December quarter to be marked by continued stabilisation rather than a sharp acceleration for HDFC Bank, with investors likely to focus on deposit mobilisation, particularly retail deposits. Analysts will also await management's commentary on the trajectory of the credit–deposit ratio and margin sustainability. The bank's credit-deposit ratio has been very high following the merger of parent HDFC Ltd. into the bank, as a major portion of the erstwhile HDFC Ltd.'s advances were funded from borrowing and loans and not from deposits.
All 24 research reports on the bank available with Informist have a 'buy' recommendation on the stock, with an average target price of INR 1,125. This is nearly 22% higher than the current market price. Shares of HDFC Bank, which have fallen nearly 7.7% since it announced the September quarter earnings, closed at INR 925.45 on Wednesday, down 1.3% from the previous day's close, on the National Stock Exchange.
The bank will declare its December quarter earnings on Saturday.
Following are the December quarter earnings estimates for HDFC Bank Ltd. from 13 brokerages in descending order of the estimate of net profit in INR million:
|
Brokerage |
Net Interest Income |
Net Profit |
|
Emkay Global Financial Services Ltd. |
322,078.00 |
188,923.00 |
|
YES Securities (India) Ltd. |
322,185.00 |
188,222.00 |
|
Motilal Oswal Financial Services Ltd. |
333,176.00 |
187,490.00 |
|
Nirmal Bang Equities Pvt. Ltd. |
343,402.00 |
187,360.00 |
|
Prabhudas Lilladher Pvt. Ltd. |
322,430.00 |
187,042.00 |
|
SMIFS Ltd. |
326,000.00 |
187,000.00 |
|
JM Financial Institutional Securities Pvt. Ltd. |
320,319.00 |
186,377.00 |
|
Systematix Shares and Stocks (India) Ltd. |
326,068.00 |
186,043.00 |
|
Sharekhan Ltd. |
328,610.00 |
181,330.00 |
|
Kotak Securities Ltd. |
331,517.00 |
179,357.00 |
|
Elara Securities (India) Pvt. Ltd. |
322,956.00 |
178,446.00 |
|
ICICI Securities Ltd. |
319,897.00 |
178,252.00 |
|
Nuvama Wealth Management Ltd. |
321,800.00 |
175,600.00 |
|
Average |
326,187.54 |
183,957.08 |
End
Edited by Tanima Banerjee
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