The Hindu Business Line : HDFC Bank posts strong growth; net up 45%

Mumbai, Jan. 21 HDFC Bank posted net profit of Rs 429 crore for the quarter ended December 31, 2007, up 45 per cent from Rs 296 crore in the same quarter last year. The increase in profits was due to increase in net interest income as well as other income.

Mr Paresh Sukhtankar, Executive Director, HDFC Bank, said the third quarter was a fairly strong one on all fronts. “Our balance sheet growth has been strong in both retail and corporate assets as well as in deposits.”

Other income increased by 82 per cent, to touch Rs 679 crore (Rs 373 crore). The main contributors to other income were fees and commissions of Rs 460 crore; foreign exchange and derivatives revenues of Rs 74.2 crore and profit or loss on revaluation or sale of investments of Rs 131.5 crore.

Interest margin

The bank managed to improve its net interest margin to 4.3 per cent. “This was partly driven by capital, as this was the first quarter that saw the full impact of the capital raised in July 2007. And partly the net interest margin was driven by actual growth,” said Mr Sukhtankar.

While he refused to say how much the cost of deposits was, Mr Sukhtankar said it was marginally lower in the third quarter compared to the second quarter of this fiscal.

The bank has seen about 40 per cent growth in both retail and corporate loans. Retails loans now form 52.6 per cent of total advances.

While some loan products like two wheeler and commercial vehicle loans have seen a slight slowdown, other segments like car loans, credit cards, business banking, and personal loans have grown.

“This has helped us increase our market share as many banks have seen slight slowdown in some loan segments,” Mr Sukhtankar said.

Deposits

The share of low cost deposits (current account and savings account) was 50. 9 per cent. “Our deposits have primarily been retail deposits and out of that a major chunk has been current account and savings account,” he said.

While it is unlikely that interest rates could see a softening in the fourth quarter, there could be some softening next year, Mr Sukhtankar said. “Banks have been clamouring for a reduction of CRR. Instead of a reduction in CRR, even if the RBI pays interest rate on CRR, it could lead to a slowdown in lending rates,” he said.

For the nine months ended December 31, 2007, the bank’s net profit was Rs 1,119 crore, up 40.3 per cent from Rs 798 crore last year. Capital adequacy ratio was 13.8 per cent (12.8 per cent).

Shares of HDFC Bank closed at Rs 1,517.55 on the BSE against the previous close of Rs 1,575.85, down 3.7 per cent.