HDFC Bank Limited : HDFC Bank April-Jun Net Profit Up 31% As Lending Grows
07/13/2012| 07:12am US/Eastern
-- HDFC Bank clocks strong growth in both loan, fee income
-- Net interest margin steady, in line with guidance at 4.3%
(Adds analyst comment, more earnings data, background throughout )
By Nupur Acharya
MUMBAI--HDFC Bank Ltd.'s (500180.BY) first quarter net profit grew 31% on year, matching analysts' expectations, helped by an increase in income from loans, fees and commissions.
Net profit for the April-June period rose to 14.17 billion rupees ($256 million), up from 10.85 billion rupees. A Dow Jones Newswires poll of nine analysts estimated the bank's net profit at 14.18 billion rupees.
HDFC's good performance is expected to be matched by the rest of India's major lenders, which have worked hard in an uncertain economy to maintain their business margins and preserve the quality of their lending portfolio.
"The only challenge for HDFC could be a further decline in economic growth, though we believe it will continue to do well on margins," said an analyst with a foreign bank who declined to be named.
The bank's net interest margin--the difference between yields on advances and cost of funds--was steady at 4.3% compared to 4.2% a year ago. This was in line with the bank's near term guidance of maintaining the margin in a 3.9%-4.3% range.
Steady margins and a 21.5% growth in loans were the main contributors to a 22% rise in interest income to 34.84 billion rupees.
Other income--including fee, commissions, treasury and foreign exchange transactions--increased 37% jump to 15.30 billion rupees.
Meanwhile, the quality of the bank's loan portfolio remained good, with net bad loans steady at 0.2% of net advances, the same as a year ago. Provisions for bad loans and other contingencies jumped slightly to 4.87 billion rupees from 4.44 billion rupees.
The quarterly result maintains HDFC's reputation as a consistent performer: India's second largest private sector lender by assets has maintained a compounded annual growth rate in net profit of 34% for more than 11 years, according to data on its website.
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