HDFC Bank [Get Quote] today said its non-tax provisions and contingencies had risen 74.1 per cent to Rs 471.1 crore in the fourth quarter of 2007-08. Still, the bank reported a 37.1 per cent rise in net profit to Rs 471.1 crore for the quarter.

This included a steep rise in tax, legal and other contingencies to Rs 172.7 crore, from around Rs 50 crore during the fourth quarter in 2006-07.

Though the bank maintained that it had not made any derivatives-related provisions, Executive Director Paresh Sukthankar said that a few of the smaller clients had gone to court over the products sold to them.

"We have not made any specific provision for this (derivatives) product range. At this point, there are some smaller customers who have filed cases against us and other banks. Their exposure is rather small," Sukthankar said.

The bank, however, did not disclose the mark-to-market position of its derivatives portfolio nor was its exposure to the segment divulged. State Bank of India [Get Quote] and Axis Bank have said that their clients had MTM losses of Rs 600-700 crore each on their derivatives portfolio at the end of March. Axis Bank has made a provision of Rs 72 crore for six transactions involving two clients who have gone to court.

"As a prudent bank, we have provided for any contingency that can arise in the future,'' said Sukthankar.

Of the total provisions, Rs 293 crore has been set aside for non-performing assets and general provisions for standard assets. Money has also been set aside for tax, legal and other contingencies. 

Sukthankar said the rise in profit was largely driven by growth rate in net interest income due to an average asset growth of 50.3 per cent. The net interest margin of the bank stood at 4.4 per cent. The bank's other income grew 39.3 per cent to Rs.549.3 crore for the quarter ended March 31, 2008, against Rs 394.4 crore for the quarter ended March 31, 2007. 

Fees and commissions rose 37.6 per cent to Rs 490.4 crore, while foreign exchange and derivatives revenues dipped 41.5 per cent to Rs 60.4 crore during the fourth quarter, as against Rs 103.3 crore.
 
Net advances of the bank grew 35.1 per cent with retail advances growing by 38.6 per cent and wholesale advances growing by 30 per cent. Of the total loan book retail accounts for 57 per cent and corporate accounts for 43 per cent.