HDFC Bank Q3 net up 31.2 pct, beats forecast

HDFC Bank Q2 net up 31.5 pct, beats f'cast

HDFC Bank, India's third largest lender by assets, reported a higher-than-expected 31.2 percent rise in quarterly net profit as a drop in loan-loss provisions and higher fee income made up for weak loan demand.

Net profit rose to 14.3 billion rupees in the fiscal third quarter ended December 31 from 10.9 billion rupees a year earlier, HDFC Bank said on Thursday.

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Non-interest revenue, including income from fees and commissions for trading foreign exchange and derivatives, rose nearly 26 percent.

Net interest income from its core banking operations rose about 12 percent to 31.2 billion rupees. That compared with about 25 percent growth in the year-earlier period before India's economy began to slow.

Analysts and investors have been closely watching the asset quality of India's banks on concerns that high interest rates could affect the ability of borrowers to repay their loans, as well as dampen demand for funds to invest.

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India's main policy rate, at 8.5 percent, is at its highest since July 2008 after the Reserve Bank of India raised interest rates 13 times since March 2010 to try to rein in inflation.

HDFC Bank, whose shares are also listed in New York, had been expected to post a net profit of 13.49 billion rupees, according to Thomson Reuters I/B/E/S.

The bank's net interest margin was stable at 4.1 percent in the quarter, while net non-performing assets were unchanged at 0.2 percent.

HDFC Bank has fewer non-performing assets than many of its competitors and its net interest margin -- a key gauge of profitability -- is also been among the best in the industry.

Lending by Indian banks increased by 17 percent in the year to December 16 compared with a rise of nearly 24 percent in the same period a year earlier, according to RBI data.

The RBI has forecast credit growth of 18 percent for the financial year ending March.

Eighteen of the 43 analyst tracking HDFC Bank have a 'buy' or a 'strong buy' rating on the stock, while 14 rate it a 'hold', according to Thomson Reuters Starmine. One analyst rates the stock a 'sell'.

Shares of HDFC Bank, which has a market capitalisation of more than $2 2 billion , rose about 12 percent in the year to January 18. Shares of bigger rivals ICICI Bank and State Bank of India fell by more than a quarter in the period.

HDFC Bank shares were up 0.64 at 485 rupees after the release of the results.