A file photo (Bloomberg)

Net interest income (NII) growth was 16.6% year-on-year (y-o-y), lower than 18.6% in the June quarter. But that slip was offset by a 26.1% rise in “other income".

One big factor for the rise in “other income" was the fact that trading losses were 50.8 crore lower than those in the year-ago period. Adjusted for trading income, the y-o-y growth in core operating profit would be lower.

Graphics by Ahmed Raza Khan/Mint

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The other factor that buoyed net profit was a much lower need for provisions, which were lower by 19.5% compared with the year-ago period.

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The bank’s asset quality has improved further during the quarter and net non-performing assets are a mere 0.2% of advances, down from 0.3% at the end of June. HDFC Bank’s loan growth has slowed, in tandem with the sector, and a cautious stance is desirable in the current environment. The management has said that there’s no demand for new project loans, so growth will be skewed towards the retail sector, as it was in the September quarter.

HDFC Bank can’t stay immune to the vagaries of the interest rate/asset quality cycle. But it’s likely to be less affected than other banks. Its reputation as a safe haven among banks enhances the appeal of the stock during challenging times.

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