HDFC Bank advanced further on Friday, following sustained buying support.

The stock of the private sector bank was up by 2.5% at Rs 248.25 on the BSE in late-afternoon trades. It, however, slipped from the day's high of Rs 250.45. 130,000 shares changed hands on the counter.

The stock has staged a smart comeback, after hitting a low in November-December 2002, with the strong Q3 results providing a further trigger.

The enactment of the Securitisation Act, coupled with the banks' consistent performance in terms of growth in revenues and net profit have also aided the recovery in bank stocks.

Analysts said that with the Securitisation Act in place, willful default by borrowers will be reduced. HDFC Bank, which hitherto concentrates on lending to AAA corporates, can now move lower down the hierarchy, which will boost its lending business.

Institutional investors have accumulated the HDFC Bank scrip at lower levels in the last few months, according to dealers.

HDFC Bank posted strong results recently. For Q3 ended 31 December 2002, it recorded a 31% rise in net profit to Rs 98.88 crore. The results were mainly driven by a healthy balance sheet growth and stability of margins. During the quarter ended 31 December 2002, interest income rose by 15% to Rs 504.86 crore (Rs 5.04 billion), while interest expenses increased by 7% to Rs 300.02 crore (Rs 3 billion). The net interest spread of the bank stood at Rs 204.84 crore (Rs 2.04 billion), up 28%. Other income increased by 65% to Rs 141.42 crore (Rs 1.41 billion), consisting principally of fees and commissions of Rs 68.20 crore, profit on sale of investments of Rs 47.10 crore and foreign exchange & derivatives revenues of Rs 23 crore. The net total income rose by 41% to Rs 346.26 crore (Rs 3.46 billion).

The bank achieved a healthy growth in its key balance sheet parameters, driven primarily by retail growth in both the deposit and loan franchises. As on December 2002, total deposits were up by 41% to Rs 21,317 crore (Rs 213.17 billion). It continued to successfully leverage its expanded branch network and enhanced customer acquisition to build Savings Account deposits, which increased by 63% to touch Rs 4163 crore (Rs 41.63 billion). The bank's customer assets (advances, corporate debt investments, etc.) witnessed a growth of 44% to Rs 12,675 crore (Rs 126.75 billion). Retail loans grew by 130% on a year-on-year basis to Rs 2,502 crore (Rs 25.02 billion) and now form 27% of gross advances, as against 16% of gross advances as on December 2001.

Portfolio quality remained healthy, with net non-performing assets at 0.7% of customer assets. The bank continued to maintain general provisions of about 1% of standard assets as against the regulatory requirement of 0.25%.

Recently, HDFC Bank cut interest rates on credit cards by by 30 basis points on a monthly basis from 2.95% to 2.65%.

HDFC Bank, recently launched Resident Foreign Currency (domestic) account facility with a 50% discount in charges on travelers cheques and foreign exchange instruments as an introductory offer. The bank will offer a preferential exchange rate, whenever its account holders convert their foreign exchange holdings (with the bank) into Indian rupees.

BSE Code: 500180