Profit soars at India's 2nd-largest private bank

Profit soars at India's 2nd-largest private bank

MUMBAI, JAN 12: Net profit for the three months ended December rose to 537.2 million rupees ($11.54 million) from 281.7 million rupees a year earlier. Analysts had expected profit to rise 70 to 80 percent, mainly due to a merger early last year.

"I had expected the net profit to rise by 70 to 80 percent because of the merger. But going forward, I don't think the bank can sustain such a growth rate in the next financial year," said Manish Karwa, a banking analyst at Pranav Securities.

Total income rose to 3.72 billion rupees in the third quarter, up from 1.9 billion a year earlier. That was mainly due to greater interest income, which rose to 3.26 billion rupees from 1.60 billion rupees a year ago.

Karwa said the bank was enjoying the fruits of the merger, which doubled its asset base to 120 billion rupees as of September 30, in addition to expanding its customer base. HDFC Bank's shares rose 4.61 percent on Friday to 239.05 rupees ahead of its third-quarter results, which were announced after the close of trading. The Bombay 30-issue index, in comparison, rose only by 0.23 percent to 4,036.58 points.

SHARES LIKELY TO RISE
The shares are likely to rise further, analysts said, in part because the tech-savvy bank will benefit from the first-mover advantage in adapting and introducing newer technology in India's banking sector, which is dominated by slower and larger state-run banks. "My one-year target for HDFC Bank is 300 rupees," or up 25.5 percent from the current price, a bank analyst in a domestic brokerage house said. Analysts expect rising fee-based income and growing corporate business to be the main profit drivers. "I expect the bank to post a net profit of 2.2 billion rupees for the financial year 2000/01 (April-March)," Karwa said. That would be an 83 percent increase from its previous year's net profit of 1.2 billion rupees.