HDFC Bank Shares in Focus on First Bonus Issue Plan

On Wednesday, the HDFC Bank shares surged 1.3 percent, touching a day’s high price of Rs. 2,022.70 on NSE after the exchange filing revealed that the board prepares to consider the issuance of bonus shares, alongside declaring a special interim dividend, with the main agenda being the announcement of its Q1FY26. The crucial board meeting is scheduled for Saturday, July 19, 2025. This development holds special significance; if the bonus share issue is approved, it will mark the very first time that HDFC Bank has rewarded its shareholders through this route. Historically, the bank has split its equity shares twice before, the first in 2011, when each share of Rs 10 face value was split into five shares of Rs 2 each, and the second in 2019, further splitting each Rs 2 share into two shares of Rs 1 each. However, despite a track record of steady value creation through stock splits and consistent dividends, a bonus share issue was not issued until now.

The timing of this proposal follows a robust year of financial performance for HDFC Bank. For FY25, the bank demonstrated notable resilience and growth during its first full year post-merger with HDFC Limited. Standalone net profit surged by 10.7 percent to Rs 67,347.4 crore, while net interest income registered a healthy expansion of 13 percent, reaching Rs 1,22,670.1 crore. The net interest margin stood at a competitive 3.48 percent. HDFC Bank’s consolidated balance sheet expanded by over 8 percent, totalling Rs 39,10,199 crore at the end of FY25. Advances grew by 5.4 percent to Rs 26,19,609 crore, and deposits posted an impressive 14.1 percent rise to Rs 27,14,715 crore, highlighting the bank's ability to attract stable, low-cost funds in a competitive landscape. Its gross non-performing assets (NPAs) were maintained at a low 1.33 percent of total advances, solidifying its reputation for asset quality. Another notable achievement was the reduction in the credit-to-deposit ratio to 96 percent, down from approximately 110 percent at the time of the merger, thus supporting a sustainable growth trajectory and optimising funding costs.

From a strategic perspective, HDFC Bank's management, led by CEO Sashidhar Jagdishan, highlighted FY25 as a period of consolidation and operational progress following the transformative merger. The management commentary is optimistic about the future. The bank has reaffirmed its confidence in growing advances on par with the industry during FY26 and exceeding the industry growth rate in the following year. The bank consciously calibrated its loan growth in FY25 to strengthen the balance sheet, focus on asset quality, and reduce the proportion of high-cost borrowings, which now stand at 14 percent. The synergies from the HDFC merger can benefit from aggressive digital transformation and expanding its presence in retail and semi-urban lending. The management remains aware of challenges tied to integration risks and heightened competition but expresses conviction in HDFC Bank’s ability to maintain its track record of stable, high-quality growth and shareholder value creation in the coming years.