HDFC Bank’s shares faced a continued decline on Thursday, following a 9.1% fall in its US-listed shares overnight—the biggest single-day drop since March 2020—which came after the lender’s third-quarter results disappointed investors.

What Happened: Over the last two days, HDFC Bank’s American depositary receipt (ADR) shares have witnessed a plunge of over 15%, while its Indian stock has tanked around 11%.

On Wednesday, HDFC Bank shares plummeted more than 8% to close at ₹1,536 after disappointing December quarter results. This marked the most substantial single-day decline in over three years, making HDFC Bank the major drag on the benchmark Nifty 50 index, where it holds a weightage of over 14%.

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Key Miss: The weakness in HDFC Bank shares impacted other banking stocks, particularly private sector lenders, resulting in a 4% decline in the Bank Nifty index.

The troubles for the country’s largest private lender arose after it missed estimates for net interest margins, a key banking metric, in Q3 due to higher costs of funds. Additionally, higher provisions and decade-low earnings per share growth in Q3 contributed to the decline.

In Q3, the private sector lender’s NIMs remained flat quarter-on-quarter at 3.6%, while provisions increased by 39% sequentially. Other notable figures for the quarter include a 4% increase in net interest income (NII) and a moderate 2.5% uptick in net profit.

Price Action: HDFC Bank’s share price was down 2.27% at ₹1,502.60 in early trade on Thursday.

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