HDFC Bank Reports 11.9% YoY Gross Advances Growth in Q3FY26

HDFC Bank, India’s largest private sector lender, made a strong start to the calendar year with its Q3 FY26 business update released on January 5, 2026. The bank’s gross advances grew 11.9% year-on-year to ₹28.45 lakh crore in the quarter ended December 31, 2025. This jump shows solid loan demand even as the economy slows and interest rates shift.

This growth stands out because it reflects real lending momentum in key segments like retail, business, and corporate loans. Many banks have struggled to expand their loan book after rate cuts by the Reserve Bank of India, but HDFC Bank has kept up strong credit growth.

Let’s look at what the 11.9% advance growth means for the bank, its customers, its stock, and India’s banking sector without the usual generic earnings talk.

HDFC Bank Q3 FY26: What the Numbers Mean?

HDFC Bank’s gross advances rose 11.9% year-on-year to around ₹28.45 lakh crore in the quarter ended December 31, 2025. This figure stands out because it shows real lending momentum compared with the same period last year, when advances were ₹25.43 lakh crore. A nearly 12% jump in loans shows that demand for credit is gaining ground even as broader economic conditions remain mixed.

Gross advances measure the total loans a bank books before adjustments like loan sales or securitisation. The relatively higher growth in gross advances compared with other internal lending metrics means HDFC Bank is pushing credit more aggressively. This can be a sign of confidence in sectors like retail, corporate, and small business lending.

At the same time, the bank’s advances under management, which adjust for things like participation certificates and loan assignments, rose about 9.8% YoY. This underlines that the bank’s loan book is broadly healthy, though slightly tempered when compared with gross figures.

Steady growth in lending like this helps the bank strengthen its earning base. It also reflects the broader credit pickup in India, as businesses and consumers borrow more for growth and spending.

Deposits and CASA Trends Strong Funding Base

Loan growth needs funding, and HDFC Bank showed good progress on that front, too. Average deposits grew about 12.2% YoY to ₹27.52 lakh crore in Q3 FY26, compared with ₹24.53 lakh crore a year earlier. This suggests the bank succeeded in attracting more funds from customers.

Within deposits, CASA (Current and Savings Accounts), the low-cost part of deposits also climbed close to 10% on average. Average time deposits grew even faster at over 13%. A strong deposit mix matters because it lowers the bank’s cost of funds and supports more profitable lending.

On a period-end basis (December 31, 2025), total deposits were about ₹28.60 lakh crore, up roughly 11.5% YoY. CASA and time deposits both grew at double-digit rates by the end of the quarter. These trends show the bank is not just growing its loan book, but also building the deposit base that funds those loans.

Post-Merger Lending Momentum

This strong advance growth comes after the merger with Housing Development Finance Corporation (HDFC Ltd) in July 2023, which created India’s largest private lender. Post-merger, the bank initially focused on liabilities like deposits to balance the large loans it inherited. In late fiscal years, loan growth lagged deposit accretion as a result.

However, the 11.9% YoY advance growth in Q3 FY26 signals that the bank is now stepping up its credit push. The broader financial sector in India is also seeing improving credit demand, supported by rate cuts and lower funding costs, which helps banks lend more.

Sustained lending growth after a large merger is not automatic. HDFC Bank’s ability to grow both loans and deposits at double-digit rates suggests solid execution in the context of a challenging macro environment. This trend also indicates that the bank is moving toward a more balanced loan-to-deposit ratio.

Market Reaction and Stock Sentiment

Despite the strong credit and deposit numbers, HDFC Bank’s share price slipped about 1% after the Q3 business update. Some investors reacted to concerns over loan-to-deposit ratios, expectations on margins, and broader market conditions rather than the core growth figures.

This kind of market reaction is not unusual when solid operational results come without a clear positive surprise on profit margins or guidance. HDFC Bank’s share performance has also been discussed in recent months, with analysts suggesting a potential **“re-rating” of valuation prospects by FY28 based on stronger growth trajectories compared with peers like ICICI Bank.

Conclusion & Outlook: What Comes Next?

Looking forward, HDFC Bank appears focused on balancing lending momentum with deposit mobilisation. The management set sights on matching or exceeding industry loan growth in fiscal 2026 and into 2027, while keeping its loan-to-deposit ratio in a comfortable band.

Interest rate trends and credit demand will remain key drivers. RBI rate cuts that started in 2025 have made borrowing cheaper, which encourages both consumers and businesses to take more credit. For banks, this means an opportunity to grow loans at attractive spreads if funding costs remain controlled.

Finally, asset quality and profitability will be closely watched. Loan growth is important, but so is the bank’s ability to keep non-performing assets low and margins healthy. Strong fundamentals in these areas will support long-term value for shareholders. 

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