HDFC Bank's net advances grew 21.5 per cent from a year ago to Rs 2.13 lakh crore 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.
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.
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 bank, which is also listed in New York and competes with bigger local rivals State Bank of India and ICICI Bank.
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 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.
Copyright Thomson Reuters 2012