HDFC Bank gained ground today in line with the trend of its  ADS listed on the NYSE.

The stock of the private sector bank was up by 2.9% at Rs 260 on the BSE in mid-morning trades. It rose by as much as 4.1% earlier in the session to a high of Rs 263. 40,300 shares changed hands on the counter in slightly over an hour of trading.

The HDFC Bank scrip is probably taking its cue from the sustained rise in its American Depository Share (ADS) listed on the New York Stock Exchange (NYSE).  On Thursday, the ADS, listed under the symbol HDB, gained $0.23 to $18.43.

The ADS has witnessed a steady rise over the last few months. From a low of $11.98 on 11 December 2002, it has surged by 53.8% within 6 months to the current $18.43. Each ADS represents three underlying equity shares. Based on the current share price in the local market, the ADS is trading at 11% premium.

In fact, the domestic share price of HDFC Bank has staged a recovery from a 52-week low of Rs 188  on 11 December 2002.

As per market buzz, the HDFC Bank scrip has  witnessed buying support in recent sessions from brokerages like Credit Lyonnais Securities and Salomon Smith Barney.

The HDFC Bank stock is a favourite of foreign institutional investors (FIIs), who have  increased their shareholding in the bank  by over 4.5% to 23.26% during the quarter ended March 2003, from 18.55% in the  quarter ended December 2002.

The bank's robust fundamentals with the lowest non–performing assets (NPAs) in the industry and continued growth on the back of strong retail business has boosted its stock price.

HDFC Bank has posted a rise of 29% in its bottom line to Rs 116.62 crore for the quarter ended March 2003. The results were mainly backed by good growth in net interest income. During the quarter, interest income rose by 21% to Rs 557.22 crore, while interest expenses increased by 12% to Rs 310.80 crore. Thus net interest spread of the bank stood at Rs 246.42 crore, up 33%.

For the full year ended March 2003, interest income rose by 19% to Rs 2022.97 crore, while interest expenses increased by 11% to Rs 1191.96 crore. The net profit grew by 30% in FY 2003 to Rs 387.60 crore.

The bank achieved a healthy growth in its key balance sheet parameters, driven primarily by retail  growth on both the deposit and loan fronts.  As on March 2003, total deposits increased by 27% to Rs 22,376 crore. The customer acquisition momentum, driven by branch expansion and the bank's strategy of providing its retail customers convenient and affordable products delivered through multiple channels, continued to bear fruit with savings account deposits increasing by 58% to Rs 4,663 crore.

Advances grew by 73% to Rs.11755 crore, with total retail advances constituting 29% as against 21% as of March 2002.

The bank's portfolio quality remains amongst the best in the Indian banking industry with net NPAs minus specific loan loss provision (interest in suspense and ECGC claims received) at 0.4% of advances and 0.3% of total customer assets. The bank's total capital adequacy ratio (CAR) stood at a healthy 11.1% - well above the regulatory minimum of 9%. Of this, Tier 1 CAR was 9.5%.

The bank registered robust growth in its retail banking business – both in deposits and loan products. Retail banking has contributed revenues of Rs  524.16 crore and 1,931.44 crore, yielding profit before tax (PBT) of Rs 55.92 crore and Rs 143.33 crore during the quarter and full year ended March 2003.

The revenues for this segment increased by 27% and 30%, while PBT rose by 29% & 37% for the quarter and full year ended March 2003 respectively. This segment has contributed 48% & 46% of the bank's revenues and 33 & 25% of PBT for the quarter and full year ended March 2003 respectively.

The total number of retail accounts increased from 2.2 million in March 2002 to over 3.1 million in March 2003, a growth of almost 50%, for the second year in succession. With a significant expansion in the geographical coverage of retail loan products like car loans and personal loans, as well as the launch of new products like two-wheeler loans, the total retail asset portfolio increased from Rs 1,430 crore as of March 2002 to Rs 3,163 crore as of March 2003, an increase of 121%.