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Retail loans fuel HDFC Bank profit

Mumbai, April 16: Buoyed by a steady offtake in the retail loan market, HDFC Bank has reported a 41.2 per cent rise in net revenues to Rs 1,817.9 crore for the last financial year as against Rs 1,287.2 crore in the previous fiscal.

Net profit increased 31.4 per cent to Rs 509.5 crore during the period from Rs 387.6 crore in 2002-03. The board has recommended a 35 per cent dividend for the year ended March 31, 2004 as against 30 per cent in the previous year.

“The retail banking business has been the fastest growing in 2003-04,” the bank said.

The revenue growth was driven principally by an increase of 62.8 per cent in net interest income, as the average balancesheet size increased by 37.3 per cent and net interest margin increased by around 60 basis points to 3.8 per cent.

HDFC Bank said commission income increased by 35.5 per cent to Rs 320 crore with the main drivers being retail banking fees on debit and credit cards, point of sales terminals, transactional charges on deposit and depository accounts and commissions from third party distribution.

The increase in profits came despite a dip in profits on sale of investments from Rs 130.3 crore in 2002-03 to Rs 26.9 crore in 2003-04.

The bank attributed this performance to “an improving economic environment in 2003-04”. Due to its strong positioning in major business lines, the bank has been able to achieve a healthy growth across various operating and financial parameters, it added.

The performance reflects the strength and diversity of the bank’s three primary business franchises — retail banking, wholesale banking and treasury as well as a disciplined approach to risk-reward management.

The bank said this year its growth would be aided by third party distribution business with insurance sales, for the first time, supplementing third party product sales of mutual funds and Reserve Bank bonds.

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