HDFC Ltd Sept qtr net up 20 pct

REUTERS - India's top mortgage lender HDFC Ltd posted a 20 percent rise in net profit for the quarter-ended September led by higher income from operations and profit on sale of investments.

HDFC said its net profit increased to 9.71 billion rupees from 8.08 billion a year ago. Income from operations rose to 40.77 billion rupees from 29.07 billion rupees in the year-ago period.

Profit from sale of investments stood at 868.8 million rupees while its net interest margin for the September quarter was at 4.3 percent.

Its loan book size also increased by a fifth to 1.27 trillion rupees as of Sept. 30 - in line with its annual guidance.

The lender expects demand for home loans to be helped by rising incomes in burgeoning middle-class households and a low penetration of housing loans in Asia's third-largest economy.

Keki Mistry, vice chairman of HDFC said, in a televised press briefing, that he did not see an adverse impact of the rate hikes on its loan growth target or on asset quality, which has been steadily improving.

The Reserve Bank of India (RBI) raised interest rates for the 12th time in 18 months in October to fight high inflation and signalled more was to come.

Industry-wide deposit growth was higher at 6.1 percent as of Sept. 9 from the beginning of the fiscal year in April, compared with a 3.4 percent growth in loans, data from the central bank showed.

HDFC competes with India's top commercial bank State Bank of India, No. 2 ICICI Bank and a host of other banks and financial institutions for a bigger share of the mortgage loan market.

Mistry said the company's spreads, the difference between borrowing and lending rates and a key gauge of profitability, would remain in the range of 2.15 percent to 2.35 percent. For the September quarter, it stood at 2.28 percent.

At 2.31 p.m., HDFC's shares, valued by the market at nearly $20 billion, were up 0.7 percent at 671.45 rupees in a weak Mumbai market.

(Reporting by Swati Pandey in MUMBAI)