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

(Adds detail throughout)

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

Its results underscore robust quarterly performances by India's private sector banks in recent quarters compared with struggling government-owned lenders, though worsening asset quality and rising debt restructuring remain serious challenges for the sector.

Mumbai-based HDFC Bank, among the first lenders to report July-September results, said on Friday its net profit rose to 15.6 billion rupees ($296.18 million) in that quarter, from 12 billion rupees a year earlier.

According to Thomson Reuters I/B/E/S, analysts had expected a net profit of 15.58 billion rupees for the bank, which is also listed in New York and competes with bigger local rivals State Bank of India and ICICI Bank .

Considered a safe investment for its robust quarterly performances, the bank saw asset quality remaining steady, with the ratio of net non-performing loans to net advances at 0.2 percent as of end-September. Total restructured loans stood at 0.3 percent of its loan book.

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

It has the highest price to book value for any large bank in Asia at a multiple of 4.8, compared with 2 times for ICICI and 1.4 for SBI.

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

Lending rates in India are still high, ranging from around 10 percent for home loans to as high as 16 percent for risky products, charges which have hurt loan demand in the country.

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

(Reporting by Swati Pandey in MUMBAI; Editing by Daniel Magnowski)


twitter.com/Swatisays)(+91-22-6180 7123)(Reuters Messaging: swati.pandey.reuters.com@reuters.net))