Mumbai: HDFC Bank has declared results for its second quarter ended September 30, 2007.

On the back of higher interest rates, the bank recorded a 40.1% increase in its quarterly net profit, which stood at Rs 368.48 crore as compared to Rs 262.94 crore in the same period of the last year.

With this recent advancement in net profit, the net profit for the first six months of the existing fiscal (2007-08) ascended 37.3% to Rs 689.71 crore from Rs 502.24 crore.

The increase enters simultaneously when the majority of the market players have been complaining about inferior retail and corporate credit expansion while delinquencies and margins have been dropping away. The bank has been capable of bettering its net interest margins (NIMs) even while keeping delinquencies under control.

Paresh Sukthankar, head credit and market risk at HDFC Bank, said, “Our core growth aspirations have remained unchanged at 30%. However, if there are opportunities to grow faster and if the incremental growth comes from stable margins and acceptable asset quality, we would tap into the growth.”

For the last four years, the HDFC Bank has reported a net profit increase between 30.4% and 32.67%.

For the second quarter, the bank’s total income arose 44% to Rs 2,845.14 crore owing to sharp rise in interest income. The bank’s interest income zoomed 49.7% to Rs 2,362.76 crore whereas the other income augmented 21.28% to Rs 482.38 crore.

The key element of the recent growth was fees and commissions that climbed 24.8% to Rs 391.9 crore. Profit on sale/revaluation of investments also saw a 1.2 times rise to Rs 46.2 crore while revenues from foreign exchange/derivatives chop down by 33.5% to Rs 38.7 crore. Interest expenses got up 51.89% to Rs 1,200 crore.

The bank’s net interest margin also came up. Advancements for the quarter lifted 45.5% to Rs 62,278 crore whereas overall deposits climbed up 43.5% to Rs 91,069 crore.
The asset quality has remained stable. The total balance sheet size climbed by 44.1% to Rs 1,21,545 crore. The capital adequacy ratio (CAR) stood at 14.9%. Net NPAs remained steady at 0.4%.

“There has been strong balance sheet growth along with stable margins. We had the distribution and pricing was logical as well. In an environment where there was rational pricing, we have upped our market share in auto loans and business banking among other segments,” added Mr. Sukthankar.