India's largest private lender HDFC Bank reports profit up 20%

India's largest private lender HDFC Bank on Saturday reported a 20% rise in net profit in the September quarter of this financial year, buoyed by higher loan growth and a rise in other income.

India's largest private lender HDFC Bank reports profit up 20%
Customers read a notice pasted outside a closed HDFC bank in Kolkata, India, November 9, 2016. REUTERS/Rupak De Chowdhuri

MUMBAI, Oct 15 (Reuters) - India's largest private lender HDFC Bank on Saturday reported a 20% rise in net profit in the September quarter of this financial year, buoyed by higher loan growth and a rise in other income.

Net profit rose to 106.05 billion rupees, beating estimates. Analysts had expected a profit of 105.97 billion rupees, according to Refinitiv IBES data.

Net interest income, the difference between interest earned and paid out, was at 210.21 billion rupees, an 18.9% jump.

Other income grew by 16.7% on the back of improvements in fees and commissions and improved foreign exchange and derivatives revenue.

Advances grew at 23.4% with the bank seeing a high pace of growth across all segments including retail, commercial and rural banking and even corporate and wholesale loans.

Within retail loans, two-wheeler advances saw a slight slip with total advances in the segment at 95.97 billion rupees compared to 97.13 billion rupees a year ago.

Deposits grew at 19%, significantly higher than industry-wide growth with an uptick seen in both time deposits and current and savings account deposits.

India's loan growth was at a multi-quarter high of 16.4% year-on-year on September 23, according to central bank data. A low base, higher retail credit, and increased demand for working capital requirement amidst high inflation have helped credit growth to pick up, Care Ratings said.

Meanwhile, deposit growth across the industry has remained comparatively tepid at 9.2%, as per the latest data.

HDFC Bank's core net interest margin, a key indicator of the bank's profitability was at 4.3%.

The lender's asset quality also improved sequentially with gross not performing assets at 1.23% compared to 1.28% in the June quarter. Net NPA also registered an improvement and was down by 2 basis points in the same period.

Total provisions inched up slightly to 32.40 billion rupees in the September quarter compared to 31.87 billion rupees in the June quarter.

The bank's total credit cost ratio was 0.87%, as compared to 1.30% for the quarter ending September 2021.

The bank remains well-capitalized with a capital adequacy ratio of 18%.

Reporting by Nupur Anand; Editing by Michael Perry