Date:12/01/2007 URL: http://www.thehindubusinessline.com/2007/01/12/stories/2007011203490600.htm

HDFC Bank Q3 net rises 31.7 pc on interest income

Our Bureau

Rise in forex earnings, derivatives transactions pushes up other income

Mumbai , Jan. 11

HDFC Bank has recorded 31.74 per cent rise in third quarter net profit to Rs 295.64 crore for the quarter ended December 31 against Rs 224.4 crore for the corresponding quarter of the previous year, on a robust rise in net interest income, assets and an improvement in net interest margin.

The bank has earned a total income of Rs 2,132.6 crore (Rs 1,475.9 crore). Net interest income has increased by 38.5 per cent to Rs 928.6 crore driven by average asset growth of 31.6 per cent and improvement in net interest margin to about 4 per cent, said a statement from the bank.

A rise in fees and commissions, foreign exchange earnings and derivatives transactions, pushed up other income.

Net advances have increased by 32.8 per cent to Rs 48,201 crore and total deposits by 30.4 per cent to Rs 66,749 crore. Gross retail loans now form 52 per cent of gross advances of the bank.

Retail loan products

"Every product in the retail loan book has shown a rise, especially credit card business, auto loans and personal loans," said Mr Paresh Sukthankar, Head- Credit and Market Risk, HDFC Bank.

As of December 2006, the number of debit cards issued by the bank touched 4 million while credit cards issued crossed the 2.75 million mark.

"The results are in line with market expectations mainly driven by improved net interest margin. Yield on advances has also improved by about 40 basis points. The right kind of CASA (current account and savings account) mix (54.9 per cent of total deposits) also restricted cost of deposits," said Mr Vishal Goyal, Banking Analyst, Edelweiss Research.

HDFC Bank recently increased its prime-lending rate to 13 per cent. Despite the rising interest rates, the bank does not see any slowdown in retail loans. "Some moderation in the system cannot be ruled out but we are well positioned with diversified growth in retail and wholesale banking. The present rate of growth can be maintained," said Mr Sukthankar.

Mortgage loans are likely to see moderation but auto loans will not be affected, he added.

Corporate lending

Corporate lending has shown a rise of about 27 per cent and the bank does not see any immediate impact of the PLR on credit off-take. "In absolute terms, the rates are affordable by corporates and as long as the corporate business grows, the demand for corporate loans will not be impacted," he said.

As on December 31, the bank has 583 branches and 1,471 ATMs. It has no immediate plans to raise any capital.

However, during the quarter ended December 31, the bank had raised Rs 479 crore of subordinated debt qualifying as Upper Tier II capital (including $100 million in foreign currency), said the bank statement.