Paul Gordon and Sumit Sharma, Bloomberg
Mumbai: HDFC Bank Ltd, India’s third biggest by market value, expects to maintain loan growth of as much as 30% in the coming year, Paresh Sukthankar, head of credit risk, said.
“Over the last 13-14 quarters we have grown our loan book in the range of 25% to 30% and we see no reason why this momentum should not be maintained,” Sukthankar said in an interview.
India’s central bank wants bank loans to companies to slow to between 24% and 25% in the year to 31 March. The annual average growth in lending was 29.8% between 2004 and 2007, it said yesterday. Loans grew more than 35% in the 12 months to 31 March and in the previous year.
HDFC’s loans grew 30% in the three months ended 31 March, as lending by banks in India rose 28%.
The Reserve Bank of India, which raised interest rates five times over the past year to contain inflation and prevent defaults, left its key interest rates unchanged at the quarterly monetary policy announcement yesterday.
HDFC’s net income rose 31% to Rs3.44 billion ($84 million) in the three months to 31 March, from Rs2.63 billion in the same period a year earlier, the Mumbai-based bank said yesterday. Interest and non-interest income rose to Rs23.84 billion from Rs16.83 billion a year earlier.
The bank’s net interest margin, or the difference between what it earned on loans and paid for deposits, rose to 4.5% from about 4% as the bank raised lending rates and avoided borrowing higher cost bulk deposits, Sukthankar said.
“The net interest margin may compress a little since 4.5% is sort of a peak,” he said. Margins ranged between 3.9% and 4.2% in earlier quarters, he said.
Bad loans in the quarter to 31 March were 1.2% of the bank’s loans.
“There has been no trend as yet of any increases and traditionally our growth has been balanced with appropriate margins and asset quality it’s never been growth at the cost of taking on risk that we were not comfortable with,” he said.
HDFC Bank shares gained Rs16.4 or 1.6% to Rs1,030 at 11:17 am on the Bombay Stock Exchange. The stock has declined 3.7% since 1 January, against the benchmark Sensex index’s 2% gain.