HDFC Bank earnings dip amid US probe

In mid‑July, HDFC Bank posted a net profit of about ₹19,060 crore for Q1 FY 2026‑27, a modest 5% annual rise, and saw net interest income climb 7% to roughly ₹33,500 crore. Asset‑quality metrics improved marginally, with gross NPA at 1.17% and net NPA at 0.41% of advances. The bank’s shares responded positively, edging up around 1.4% to ₹819.60.

A few days later, the market turned more cautious. The stock fell to a 12‑month low—about $22.90 on the NYSE and ₹744.90 on the NSE—a dip of roughly 1% in one session and a 24% decline year‑to‑date. While profit still rose, the net interest margin slipped to 3.26%, lagging rivals such as ICICI and Axis Bank. Analysts highlighted concerns over profit‑growth pace and margin compression, outweighing the positive news that HDFC Bank had fully resolved a large builder‑loan portfolio inherited from its 2023 merger.

On July 23‑24, three U.S. law firms launched preliminary investigations into whether the bank and certain executives mischaracterised a payment of about ₹45 crore to the Maharashtra State Road Development Corporation as a marketing expense, potentially violating U.S. securities laws. The news prompted further share weakness, with the BSE price falling about 1% and the ADRs dropping 4.1%.

A further update on July 27 reported that three U.S. shareholder‑law firms—Howard G. Smith, Frank R. Cruz, and Glancy Prongay Wolke & Rotter—have begun separate preliminary probes into the same alleged mischaracterisation. The firms are inviting investors who suffered losses in HDFC ADRs to contact them and are assessing whether the evidence justifies legal action. The investigations remain at an early stage, no lawsuits have been filed, and HDFC Bank continues to deny any wrongdoing.