Private sector lender, HDFC Bank aims at booming growth in its loan book this year. The first quarter results for the bank strengthen its forecast.
The rivals of the bank namely State Bank of India and ICICI Bank are also gaining benefits from the recovery that the economy is going through. The economy is set to grow about 8.5% in this fiscal.
"The signs of core loan growth are clearly visible in the strong earnings of the top banks and we see this picking up in the coming quarters," said KK Mital, head of portfolio management services at Globe Capital.
The Q1 results for the bank have so far matched forecasts made by analysts. The bank has shown 34% rise in its net profit. Increasing loan demand and improving asset quality are making the bank more confident that it would be able to match the threshold of 20% credit offtake set by RBI this fiscal and in fact supercede it.
"There has been a steady increase in the asset quality as a result of which the provisions and contingencies are lower," said HDFC Bank's executive director Paresh Sukthankar. "We do see corporate loan growth remaining strong."
According to analysts, rise in interest rates may bring down the demand for loans, especially from mortgage loans.
HDFC Bank's April-June net profit rose to Rs 8.12 billion from Rs 6.06 billion. The net interest margin of the bank has risen to 4.3% as against 4.2% earlier.