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HDB Financial Services reported a 2.4% year-on-year drop in net profit to INR 568 crore for Q1 FY26. This decline was primarily due to a sharp rise in loan loss provisions (over 60% to INR 670 crore) and an increase in gross stage-3 assets (NPA ratio up to 2.56%). Despite this, gross loans grew 14.3% to over INR 1 lakh crore. Disbursements fell due to reduced enterprise lending, but revenue from operations rose 15% to INR 4,465 crore. This is the non-bank lender's first quarterly report post-listing, highlighting mixed financial performance.
HDB Financial Services, a non-bank lender, has recently reported a decline in its net profit for the first quarter of the current fiscal year. This financial performance, impacting its operations in India, shows a fall primarily due to a significant increase in loan loss provisions, as detailed in its latest earnings report. Advertisement
HDB Financial Services' net profit for the quarter ended June (Q1 FY26) fell by 2.4% year-on-year, reaching INR 568 crore. This decline was primarily due to a sharp rise in loan loss provisions, which jumped over 60% to INR 670 crore. The company's asset quality also deteriorated, with the gross NPA (Non-Performing Asset) ratio increasing to 2.56% as of June 30, up from 1.93% a year ago. The net NPA ratio also rose to 1.11% from 0.77% year-on-year. Credit costs for the company increased to 2.5% from 1.8% a year ago.
Despite the fall in net profit, gross loans grew by 14.3% year-on-year, crossing INR 1 lakh crore. Sequentially, gross loans grew by 2.3%. However, disbursements for the quarter fell to INR 15,171 crore from INR 17,643 crore. This decline was mainly due to a reduction in enterprise lending and asset finance, though this was partly offset by a rise in consumer finance.
Revenue from operations increased by 15% year-on-year to INR 4,465 crore. Net interest income grew by 18% to INR 2,092 crore. The net interest margin improved to 7.7%. The company's capital adequacy ratio also strengthened to 20.18% from 19.22%.
This marks the first quarterly earnings report for the non-bank lender after its listing on the stock exchanges. The performance of non-banking financial companies (NBFCs) like HDB Financial Services provides insights into broader lending trends and asset quality challenges in India's financial sector.
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