HDFC Bank sees strong loan growth after profit rises

  • Reuters, Mumbai
  • Updated: Apr 23, 2015 17:46 IST

HDFC Bank Ltd, India's second-biggest private sector lender by assets, said on Thursday it was optimistic of growing loans on the back of faster economic expansion after reporting net profit grew more than a fifth in the March quarter.

The lender said net profit rose to 28.07 billion rupees ($444 million) in its fiscal fourth quarter from 23.27 billion rupees a year ago. Analysts on average had expected a profit of 27.8 billion rupees, according to data compiled by Thomson Reuters.

HDFC Bank expects to grow loans faster than the banking sector during the financial year to March 2016, Paresh Sukthankar, deputy managing director at the lender, told reporters.

He expected the banking system loan growth this fiscal year to be between 13% and 14% if the economy grows one percentage point faster. Bank loans grew about 12% last fiscal year.

Indian lenders have been hurt by two straight years of slower economic expansion that led to projects being stalled and corporate balance sheets getting stretched. Demand for loans from companies has yet to pick up, although consumer loans are growing fast.

"Have we seen a huge pick up on the capex side? The answer is 'no'," Sukthankar said, but added that was not a surprise since loan demand revival typically comes with a lag to economic recovery.

HDFC Bank's net interest income grew 21.4% in the March quarter as advances rose 20.6%. Net interest margin was stable at 4.4%. Bad loans as a percentage of total loans was at 0.9% compared with 1% in the third quarter.

Shares in HDFC Bank, which is India's most-valuable lender with more than $40 billion in market capitalisation, have outperformed bigger rivals such as State Bank of India and ICICI Bank so far this year.

HDFC Bank stock has gained 6.5% in 2015, while the bank sector index is down 2.6%.

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