HDFC Bank Q3 net up 20 pct as expected, bad loans tick up

MUMBAI (Reuters) - HDFC Bank Ltd, India's second-biggest private sector lender by assets, met analyst expectations with an about 20 percent increase in quarterly profit even as its bad loans ticked up.

Net profit rose to 33.57 billion rupees ($495 million) for the third quarter ended Dec. 31, from 27.95 billion rupees a year earlier, HDFC Bank said in a statement on Monday. That compares with analysts' average estimate of 33.61 billion rupees.

Gross non-performing loans as a percentage of total loans rose to 0.97 percent in the December quarter from 0.91 percent in the previous three months.

Indian banks are expected to report higher bad loans in the December and March quarters as the central bank has asked them to treat some of the troubled loan accounts as if they were non-performing loans and make required provisions.

HDFC Bank had negligible impact of the Reserve Bank of India directive, Deputy Managing Director Paresh Sukthankar said on a conference call, but saw bad loan additions from sectors such as agriculture and small and medium enterprises.

It also changed the method for calculating bad loans on credit cards.

Loan loss provisions increased to 6.02 billion rupees from 4.88 billion rupees a year earlier, the bank said.

Net interest income rose 24 percent from a year earlier to 70.69 billion rupees, while net interest margin came at 4.3 percent.

Loans at end-December were 25.7 percent higher from a year earlier. Non-interest revenue grew a faster 28.9 percent from a year earlier.

Shares in HDFC Bank, the biggest among Indian lenders by market capitalisation, were up about 1 percent by 0918 GMT in a Mumbai market that was up 0.2 percent. Bank Nifty gained 0.4 percent.

($1 = 67.7800 Indian rupees)

(Reporting by Devidutta Tripathy; Editing by Gopakumar Warrier and Anand Basu)