HDFC Bank surged 5.6% to Rs 240 on BSE in afternoon trades on Wednesday as the scrip was vindicated by the company's strong record on the performance front.

The scrip was trading near the day's high of Rs 240.80. Around 132,000 shares HDFC Bank shares changed hands on the counter on BSE.

The stock is rising on sustained buying, coming back from a 52-week low touched in mid-December 2002. From Rs 188.40 on 11 December 2002, it has surged 27.3% to the current Rs 240.

The passage of the Securitisation Bill in Parliament has created the right environment for the lending business and recently strong Q3 results have boosted shares of the private sector bank. The bank's consistent performance, a growth in revenues and net profit have also aided the recovery in bank's shares.

Aanalysts feel that with the Securitisation Bill in place, willful default by borrowers will be reduced. HDFC Bank, which hitherto concentrated on lending to AAA corporates, can now move lower down the hierarchy which would increase its lending business.

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

HDFC bank posted strong Q3 results recently. For Q3 ended 31 December 2002, it posted a 31% rise in net profit to Rs 98.88 crore. The results were mainly driven by a healthy balance sheet growth and continued stability of margins. During the quarter ended 31 December 2002, interest income rose 15% to Rs 504.86 crore (Rs 5.04 billion), while interest expenses increased 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 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 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 21317 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 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 12675 crore (Rs 126.75 billion). Retail loans grew 130% on a year-on-year basis to Rs 2502 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%.

BSE Code: 500180