UPDATE 1-India's HDFC Bank Q2 net up 30 pct, meets forecast


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Oct 12 (Reuters) - HDFC Bank , India's No.3 lender,met forecasts with a 30 percent year-on-year rise in secondquarter profit, led by stronger loan growth, greater fee incomeand stable net interest margins.

Its results underscore robust quarterly performances byIndia's private sector banks in recent quarters compared withstruggling government-owned lenders, though worsening assetquality and rising debt restructuring remain serious challengesfor the sector.

Mumbai-based HDFC Bank, among the first lenders to reportJuly-September results, said on Friday its net profit rose to15.6 billion rupees ($296.18 million) in that quarter, from 12billion rupees a year earlier.

According to Thomson Reuters I/B/E/S, analysts had expecteda net profit of 15.58 billion rupees for the bank, which is alsolisted in New York and competes with bigger local rivalsState Bank of India and ICICI Bank .

Considered a safe investment for its robust quarterlyperformances, the bank saw asset quality remaining steady, withthe ratio of net non-performing loans to net advances at 0.2percent as of end-September. Total restructured loans stood at0.3 percent of its loan book.

Net interest income grew 26.7 percent to 37.3 billion rupeesduring the quarter, driven by 23 percent growth in its loan bookand stable net interest margin, a key gauge of profitability,which stood at 4.2 percent, in line with the bank's estimate ofholding it at 3.9-4.2 percent in the near-term.

It has the highest price to book value for any large bank inAsia at a multiple of 4.8, compared with 2 times for ICICI and1.4 for SBI.

HDFC expects its loan book to grow at more than the 17percent expected for the overall domestic banking sector in thecurrent financial year ending March 2013.

Lending rates in India are still high, ranging from around10 percent for home loans to as high as 16 percent for riskyproducts, charges which have hurt loan demand in the country.

Shares in HDFC Bank, which the market values at $27.8billion, were up 1 percent at 631.15 rupees b y 08.57 GMT w hilethe broader Mumbai market was down 0.53 percent and thebanking sector index was flat.

(Reporting by Swati Pandey in MUMBAI; Editing by DanielMagnowski)


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