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HDFC Bank Q1 Net Up 31%, Beats Forecast

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HDFC Bank, India's No.3 lender, beat forecasts with a 30.6 per cent rise in quarterly profit, led by stronger loan growth, better fee income and higher net interest margins.

Mumbai-based HDFC Bank said on 13 July its net profit was Rs 1,417 crore in the fiscal first quarter-ended June, against Rs 1,085 crore a year earlier.

The total income of the bank rose to Rs 9,536.9 crore in the April-June quarter, from Rs 7,098 crore in the same period last year -- an increase of 34.3 per cent.

According to Thomson Reuters I/B/E/S, analysts had expected a net profit of Rs 1,370 crore 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 per cent in April-June, compared with 4.2 per cent in the March quarter. The bank aims to keep this figure in a range of 3.9-4.2 per cent in the near-term.

HDFC Bank's net advances grew 21.5 per cent from a year ago to Rs 2.13 trillion as of end-June. Net interest income rose 22.3 per cent in the quarter to Rs 3,480 crore, 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 per cent as of end-June, unchanged from a year ago. Total restructured loans, including applications received and those under processing, were at 0.3 per cent of gross advances, it said.

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

The RBI 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  (approximately Rs 1,37,760 crore), were up 0.45 per cent at Rs 582.7 while the broader Mumbai market was down 0.28 per cent and the banking sector index dropped 0.39 per cent.