Mumbai: Second largest private sector lender HDFC Bank today reported a 20.2 per cent growth in net profit to Rs 3,239 crore for the three months to June on the back of a healthy rise in core net-interest income, even as the asset quality marginally worsened.

The Aditya Puri-led bank, known for retail lending focus that has been helping it grow much higher than the industry and maintain industry-best asset quality for long, has also begun to face challenges its peers have been suffering.

While gross non-performing loans rose to 1.04 per cent from 0.95 per cent, its net NPA remained flat at 0.3 per cent.

Accordingly, provisions rose to Rs 866.7 crore from Rs 728 crore a year ago.

But, deputy managing director Paresh Sukthankar was quick to dismiss any concern on the asset quality front saying the bank is “comfortable” with the rise in bad loans.

“We are still very comfortable,” Sukthankar told reporters adding “no serious large chunky” corporate account had contributed to the rise in the bad loans.

“Primary growth driver is the rise in net interest income, which is 71 per cent of our net revenue and grew 21.8 per cent. So, that clearly sets the tone for the topline,” Sukthankar said.

He said loan growth, which grew nearly three times the industry average at 23.2 per cent, was driven by small-and- medium corporate borrowers and individuals.

Growth in NIIs was driven by average assets growth of 20.2 per cent and a expansion in net interest margins at 4.4 per cent from 4.3 per cent. Net revenue rose 20 per cent to Rs 10,588 crore.

Net interest margin for the quarter stood at 4.4 per cent, and Sukthankar guided for the margins to remain in the 4-4.4 per cent range.

Fees and commissions rose to Rs 1,977.9 crore from Rs 1,713 crore, but foreign exchange and derivatives revenue dipped to Rs 314.5 crore from Rs 348 crore.

Total income rose to Rs 19,322.63 crore during the quarter under review, up 17.08 as against Rs 16,502.97 crore in the same period last year.

PTI