July 13, 2012 / 9:31 AM / in 6 years

UPDATE 1-India's HDFC Bank Q1 net up 31 pct, beats forecast

MUMBAI, July 13 (Reuters) - HDFC Bank, India’s No.3 lender, beat forecasts with a 30.6 percent rise in quarterly profit, led by stronger loan growth, better fee income and higher net interest margins.

Mumbai-based HDFC Bank said on Friday its net profit was 14.17 billion rupees ($253.62 million) in the fiscal first quarter-ended June, against 10.85 billion rupees a year earlier.

According to Thomson Reuters I/B/E/S, analysts had expected a net profit of 13.7 billion rupees for the bank, which is also listed in New York and competes with bigger local rivals State Bank of India and ICICI Bank.

Net interest margin, a key gauge of profitability, stood at 4.3 percent in April-June, compared with 4.2 percent in the March quarter. The bank aims to keep this figure in a range of 3.9-4.2 percent in the near-term.

HDFC Bank’s net advances grew 21.5 percent from a year ago to 2.13 trillion rupees as of end-June. Net interest income rose 22.3 percent in the quarter to 34.8 billion rupees, driven by strong loan growth and higher net interest margin.

The lender reported steady asset quality, with the ratio of net non-performing assets to net advances at 0.2 percent as of end-June, unchanged from a year ago. Total restructured loans, including applications received and those under processing, were at 0.3 percent of gross advances, it said.

The bank sees its loan book growing more than 17 percent expected for the domestic banking sector in the current financial year-ending March 2013.

India’s central bank cut rates by an unexpected 50 basis points in April, after raising it 13 times between March 2010 and October 2011, to boost the sagging economy.

Indian banks have not fully passed on the benefit of lower rates as they are saddled with high-cost, long-term deposits and as overall cost of funds continues to remain high.

Shares of HDFC Bank, which the market values at $24.6 billion, were up 0.45 percent at 582.7 rupees while the broader Mumbai market was down 0.28 percent and the banking sector index dropped 0.39 percent. ($1 = 55.8700 Indian rupees) (Reporting by Swati Pandey; Editing by Anupama Dwivedi)

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