HDB Financial Services Reports Rs 568 Cr PAT In Q1 FY26, AUM Nears Rs 1.1 Trillion Mark; NII Jumps 18.3% YoY

Unaudited standalone financial results for the first quarter of FY26 were released by HDB Financial Services Limited on Tuesday. The results showed steady growth in all major operational indicators. As of June 30, 2025, the company's Assets Under Management (AUM) had gone up by 14.7% YoY to Rs 1,09,690 crore. While net interest income increased by 18.3% to Rs 2,092 crore, total gross loans surged by 14.3% to Rs 1,09,342 crore.

At Rs 2,726 crore, net total income represented an annual rise of 14.2%. At Rs 1,402 crore, pre-provisioning operating profit improved 17.2%. However, due to a significant rise in loan losses and provisions, which went from Rs 412 crore to Rs 670 crore, profit after tax slipped marginally to Rs 568 crore from Rs 582 crore in the previous year.

The company earned a 13.2% return on equity (RoE) and a 1.94% return on assets (RoA). At 7.7%, the Net Interest Margin (NIM) demonstrated steady income output effectiveness. Indicating a conservative lending approach, HDB Financial Services said that its total disbursements for the quarter came to Rs 15,171 crore, down 14.0% QoQ and 8.1% YoY. At Rs 1,09,342 crore, total gross loans jumped 14.3% YoY and 2.3% sequentially. The robust NIM of 7.7% was supported by an improvement in the return on assets to 14.2% and an unchanged cost of funds at 6.4%. A year ago, the net total income was Rs 2,074 crore; this year, it was Rs 2,422 crore.

At 42.7%, the cost-to-income ratio was just slightly better than it had been in prior quarters. The yearly Opex-to-Gross Loans ratio was steady at 3.8%. Although it was down 2.4% YoY, PAT increased 7.0% QoQ despite better credit provisioning. The asset quality parameters of HDB Financial Services showed a slight decline in the first quarter of FY26.

As of June 30, 2025, Gross Stage 3 assets (Gross NPA) were for 2.56% of the overall loan book, up from 2.26% the quarter before and 1.93% the year before. A rise in financial assets was also indicated by the Net NPA, which increased to 1.11%. The credit cost for the quarter was Rs 670 crore, which represents a notable year-on-year rise from Rs 412 crore in Q1 FY25 and translates to 2.5% of the average loan book on an annualized basis.

With a Return on Equity (RoE) of 13.2% and a Return on Assets (RoA) of 1.94%, which was somewhat lower than the previous quarter, HDB Financial Services maintained strong return metrics in Q1 FY26. Consistent value generation for shareholders was demonstrated by the quarter's earnings per share (EPS), which was Rs 7.1, and book value per share, which improved to Rs 225.4.

HDB Financial Services has shown solid and reliable financial performance throughout the years. With a strong 10-year compound annual growth rate (CAGR) of 18.7%, the company's assets under management (AUM) grew from Rs 19,290 crore in FY15 to Rs 1,07,262 crore in FY25. Similarly, net total income from lending increased to Rs 8,693 crore in FY25 at a 10-year CAGR of 22.9%. With a three-year compound annual growth rate (CAGR) of 29.1%, HDBFS's profit after tax went up from Rs 349 crore in FY15 to Rs 2,176 crore in FY25.