HDFC Bank announced on Wednesday that its net profit was up by 20.5% in the second quarter in financial year 2015-16, helped by robust growth in interest income and other income.

The bank's net profit surged to Rs.2,869.45 crore in the July-September quarter compared to Rs.2,381.46 crore in the corresponding quarter last year.

While net interest income rose 21.2% to Rs.6,681 crore in the quarter, other income increased by 25% to Rs.2,551.76 crore.

The bank saw a huge growth of 28% in loan disbursements for the quarter ending 30 September. The total advances stood at Rs.4,18,541 crore.

"On a relative basis, it is quite likely that retail will outpace corporate loans this year. But it is probable that the corporate loan book in itself will do better than what it did last year," Livemint quoted Paresh Sukthankar, deputy managing director, HDFC Bank, as saying.

However, the bank's net interest margin (NIM) was down 10 bps to 4.2% in the quarter, led by a reduction in the bank's minimum lending rate, Sukthankar said.

HDFC was the first private sector bank to announce a cut in its base rate by 35 bps to 9.35% on 1 September, following a 50bps cut in repo rate by the Reserve Bank of India.

"In June, when we did not have the base rate benefit, we were still in the 20% loan growth range. So, it is difficult to say how much came in only because of the base rate cut, because it is part of a larger change in momentum," Sukthankar said.

The bank also saw its gross non-performing assets (NPAs) declining to 0.91% in the quarter as against 1.02% in the same quarter last year.

"In light of current macro environment, the current earnings trajectory of 20%+ yoy is strong which in our view, justifies a premium valuation multiple. Hence, we recommend BUY rating on the stock," said Vaibhav Agrawal, VP Research- Banking, Angel Broking.

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