HDFC Bank, India's No 3 lender, beat forecasts with a 30.6% 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 Rs. 14.17 billion in the fiscal first quarter-ended June, against Rs. 10.85 billion 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% in April-June, compared with 4.2% in the March quarter. The bank aims to keep this figure in a range of 3.9-4.2% in the near-term.
HDFC Bank's net advances grew 21.5% from a year ago to 2.13 trillion rupees as of end-June. Net interest income rose 22.3% 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% as of end-June, unchanged from a year ago. Total restructured loans, including applications received and those under processing, were at 0.3% of gross advances, it said.
The bank sees its loan book growing more than 17% 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, were up 0.45% at Rs. 582.7 while the broader Mumbai market was down 0.28% and the banking sector index dropped 0.39%.