The city-headquartered bank had posted a net profit of Rs 1,429.66 crore in the October-December period last year.

second-largest private lender's net interest income moved up 21.9 per cent to Rs 3,798.9 crore while non-interest income grew 26.7 per cent to Rs 1,798.9 crore.

"The net interest income growth came in as a result of 24.3 per cent rise in credit while fees and commissions, which are the largest component of the non-interest income part, also grew healthily," HDFC Bank Executive Director Paresh Sukhtankar told reporters after the results.

Shares of the bank, however, fell by over 1 per cent to settle at Rs 659 on the BSE today.

The bank's net interest margin came down slightly as compared to the preceding September quarter to 4.1 per cent on a drop in the low cost current and savings deposits to 45.4 per cent of the overall deposits.

Going forward, Sukhtankar exuded confidence it will be able to maintain NIM in the 3.9 to 4.2 per cent bracket and said that the growth in savings account deposits has been healthy in Q3 and it will be maintained in the future.

On the assets quality front, there was a marginal increase in the gross non performing assets ratio, which moved up to 1 per cent of the overall assets from the preceding quarter's 0.91 per cent.

Sukhtankar said the asset quality is under control and the GNPA ratio is still below the peak seen during the year ago period. He said on a y-o-y basis, the restructured book has come down to 0.28 per cent from 0.37 per cent.

The lender added around Rs 300 crore to its NPAs during the quarter under review and Sukhtankar said a majority 85 per cent of this came from retail products, including commercial vehicle and construction equipment finance.

Unsecured products like credit cards and personal loans did not have major delinquencies, Sukhtankar added.

Sukhtankar said retail assets led the credit growth and expected the trend to continue into the future as well.

During the quarter, it bought Rs 1,000 crore of housing loans from its parent HDFC, he said.

Sukhtankar said he hopes the RBI will cut its key lending rate, the repo, by 0.25 per cent during the January 29 monetary policy announcement and also compliment it with an equal cut in cash reserve ratio to boost liquidity.

Banks will be in a position to cut deposit rates only if the two conditions are met, which will gradually translate into a cut in lending rates, he maintained.

Overnight borrowings by banks have to come down to up to Rs 50,000 crore from the current range of around Rs 1,00,000 crore for the banks to be comfortable and act on rates, he said.

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