HDFC Bank net meets f'cast, loan growth slowing

MUMBAI Oct 16 (Reuters) - India's HDFC Bank (HDBK.BO) met forecasts with a 43.5 percent jump in quarterly profit, lifted by strong loan growth and acquisition of a smaller rival, but a senior official said demand was softening.

Executive Director Paresh Sukthankar said seven-year high interest rates and a likelihood of an economic slowdown could dent the rapid pace of loan growth.

"I will call it healthy demand but with quite a bit of caution. However, we are well positioned to beat the sector's pace," he said by telephone.

HDFC Bank, India's second-largest private sector lender, said net profit rose to 5.28 billion rupees ($108 million) in the fiscal second quarter ended Sept. 30 from 3.68 billion a year ago.

The New York-listed bank (HDB.N) said it was the 26th consecutive quarter of profit growth of at least 30 percent.

Net interest income, the difference between interest earned and paid, rose 60.5 percent to 18.7 billion rupees, it said in a statement, adding the result included Centurion Bank of Punjab which it acquired in May.

Ten analysts polled by Reuters on average expected a net profit of 5.2 billion rupees on net interest income of 18.5 billion rupees.

Excluding Centurion the net profit growth would have been 30 percent, Sukthankar said.

Net interest margin, a key measure of efficiency, nudged up to 4.2 percent from 4.1 percent and should hover around that level, he said.

The bank said its loans in the September quarter grew by slightly over 40 percent, well off the 79 percent rise in the April-June period, but ahead of the industry average.

Loan growth in the Indian banking industry stood at 24.8 percent in the two weeks to Sept. 26, central bank data showed, slower than the 30 percent rise in the last three calendar years.

However, in the past one week the central has freed up 1 trillion rupees in a series of measures to ease a cash crunch and to ensure adequate funds were available for lending.

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Sukthankar said the bank may look at raising some capital over the next few months when markets stabilise, after its capital adequacy ratio fell to 11.4 percent from 12.2 percent in the previous quarter as it complied with certain regulatory provisions.

HDFC Bank's net non-performing assets rose to 0.57 percent from 0.5 percent in the June quarter and he expected a mild rise in bad debts as economic activity moderates, but said the bank had adequate provisions.

Ahead of the result, shares in HDFC ended 4.2 percent lower at 1,087.35 rupees, taking their losses in October to 11.5 percent, compared with a 17.7 percent fall in the benchmark index .BSESN and 9.5 percent drop in the sector index .BSEBANK. ($1-48.8 rupees) (Reporting by Narayanan Somasundaram; Editing by Ranjit Gangadharan)