Berkshire Q3 profit up 29 percent; operating results miss

By Jonathan Stempel and Luciana Lopez

REUTERS - Warren Buffett's Berkshire Hathaway Inc posted a 29 percent jump in third-quarter profit as it recorded big gains on investments made during the financial crisis, but operating results missed forecasts amid weakness in insurance operations.

Quarterly results included $1.4 billion of gains from investments that Buffett made in October 2008, including in General Electric Co and Goldman Sachs Group Inc warrants, and bonds related to candy maker Mars Inc's purchase of rival Wrigley.

Such investments helped give Buffett a reputation as a lender of last resort.

But investment and derivative gains do not factor into operating results, and while profit rose at Berkshire's Burlington Northern Santa Fe railroad and MidAmerican energy and utility units, insurance underwriting results deteriorated.

Net income rose to $5.05 billion, or $3,074 per Class A share, from $3.92 billion, or $2,373 per share, a year earlier, Berkshire said on Friday.

Operating profit rose just 8 percent to $3.66 billion, or $2,228 per Class A share, from $3.4 billion, or $2,057 per share. Analysts on average expected $2,402 per share, according to Thomson Reuters I/B/E/S.

Michael Yoshikami, president of Destination Wealth Management in Walnut Creek, California, which invests $1.3 billion and owns Berkshire stock, said the company can boost investment results if bond yields rise once the U.S. Federal Reserve pulls back on efforts to prop up the nation's economy.

"The U.S. economy is rather stumbling, and that is positive actually for their infrastructure investments such as railroads," he said. "All things considered, we are fairly pleased with the results."

Book value, Buffett's preferred measure of the Omaha, Nebraska-based company's worth, rose 11 percent this year to $126,766 per Class A share as of September 30, 2013.

INSURANCE WEAKENS

Net insurance underwriting premiums fell 57 percent to $170 million. Results weakened at the Geico auto insurance unit, which paid out a higher percentage of premiums to cover claims than a year earlier, and the General Re reinsurance unit, which had a $400 million underwriting loss from a European hailstorm.

In addition, Berkshire's main reinsurance business sustained a $206 million pre-tax underwriting loss, hurt by lower premiums and currency fluctuations.

Profit rose about 6 percent at Burlington Northern to $989 million, as higher shipments of industrial products, consumer products and coal offset a drop for agricultural products amid lower grain exports and strong global competition.

Results also improved in businesses such as the Forest River recreational vehicle unit. Revenue from jewelry, home furnishings and other retail businesses rose 18 percent.

Bill Smead, chief executive of Smead Capital Management in Seattle, which invests 3 percent of its $700 million of assets in Berkshire, said the 83-year-old Buffett is setting up the company to perform over the long haul.

"He's making a big push into almost everything associated with the idea that we'll build a lot more homes in the next 10 years," Smead said.

Berkshire ended the quarter with $42.08 billion of cash and equivalents, giving Buffett the firepower to make one or more large acquisitions, which he calls "elephants."

The second-richest American wants to keep about $20 billion in cash, in part for possible insurance payouts on storms.

Berkshire bought $1.77 billion worth of stock during the quarter but sold $1.48 billion, and was actually a bigger net purchaser of bonds than stocks.

Buffett has run Berkshire since 1965, favoring businesses with consistent earnings power. Berkshire now has more than 80 businesses, though it remains best known for insurance.

He spent $12.3 billion in June to buy part of ketchup maker H.J. Heinz Co. Berkshire also owns $104.9 billion in equities, including such stocks as Coca-Cola Co , International Business Machines Corp and Wells Fargo & Co .

In Friday trading, Berkshire Class A shares closed up $127.70 at $173,122.50, while its Class B shares rose 19 cents to $115.27. Berkshire released results after U.S. markets closed. Its B shares fell 0.7 percent to $114.51 after hours. (Reporting by Jonathan Stempel, Jennifer Ablan and Luciana Lopez; Editing by James Dalgleish, Leslie Gevirtz, Andrew Hay and Bob Burgdorfer)

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Wockhardt profit dives on U.S., UK regulator demands

By Aradhana Aravindan and Sumeet Chatterjee

MUMBAI (Reuters) - Wockhardt Ltd faces a year or more to get U.S. and British regulators to end curbs on its shipments of medicines to the two countries, the Indian drugmaker said on Friday after posting its smallest profit in six quarters.

Indian firms, which make nearly 40 percent of generic and over-the-counter drugs for the U.S. market, face more regulatory woes, including a record fine for Ranbaxy Laboratories , amid increased scrutiny by overseas regulators.

That has included export restrictions imposed on three out of 12 Wockhardt plants, including the key Chikalthana and Waluj factories in western India, in the last six months.

Wockhardt expects its "corrective and remediation plans" to address the regulatory issues to take about six months, which will be followed by an inspection by the authorities, said Managing Director Murtaza Khorakiwala.

"So probably the entire process would take upwards of a year from now. It could be earlier than that, it could take longer than that. The situation is very uncertain," he said on a call with analysts.

Shares in Wockhardt, which makes insulin, painkillers and generics for treating cardiology and neurological disorders, ended 1.1 percent lower at 456.35 rupees in the main Mumbai market, <.nsei> which fell 0.3 percent. The stock is down about 80 percent from a record high hit in March.

Khorakiwala said the company was expanding capacity at some of its other Indian plants to cushion the impact of the regulatory actions in two of its largest markets.

It is, however, not likely to be able to generate revenue soon from a shift to other plants as the products would require fresh approvals from overseas health regulators, which analysts say may take two-to-three quarters.

Wockhardt reported a net profit of 1.4 billion rupees for the three months ended September 30, compared with 4.5 billion rupees a year earlier. Revenues fell 11 percent to 12 billion rupees, the company said in a statement on Friday.

"The financial results are not something the market is looking at. The market is more focused and concerned about the regulatory actions," said Jagannadham Thunuguntla, head of research at SMC Global Securities.

"It's not a question of a project or contract loss, but it's a question of credibility now."

Wockhardt has said a U.S. import alert at its Waluj factory, imposed in May, could cost it $100 million in annual sales.

Its factory in Chikalthana, India, was earlier this month hit by the British drug regulator's curb on imports from the plant over manufacturing deficiencies.

The U.S. Food and Drug Administration has also raised concerns with Wockhardt about the plant, and the company said it has responded and has yet to hear back from the agency.

Wockhardt has said it has taken measures to improve quality oversight at its factories, including the appointment of a new quality chief, hiring an outside consultant and training staff. (Additional reporting by Abhishek Vishnoi; Editing by Jeremy Laurence, Tony Munroe and Patrick Lannin)

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ICICI bets on consumer loans; Q2 profit up 20 pct

By Swati Pandey

MUMBAI (Reuters) - ICICI Bank Ltd , India's largest private-sector lender by assets, is betting on consumer lending to help drive earnings growth this year after car and home loans helped it post over 20 percent profit gain for the third straight quarter.

ICICI is trying to emulate the success of rival HDFC Bank Ltd with a renewed push into consumer loans as corporate investment bears the brunt of economic slowdown as well as bureaucratic bottlenecks.

The bank's retail book, or loans for cars, homes and credit cards, is likely to grow 22-23 percent in the financial year ending March compared with overall credit growth of 17-18 percent, CEO Chanda Kochhar told reporters after the company released earnings results on Friday.

Net profit rose to 23.5 billion rupees in July-September from a year earlier. That compared with a 21.9 billion rupees estimate of 23 analysts polled by Thomson Reuters.

Shares of ICICI, which the market values at $19 billion, ended 0.13 percent higher compared with the benchmark's <.bsesn> 0.2 percent decline.

"We are increasing our penetration in India. We added to our number of geographies from where we do home loans, from where we do auto loans, our branch network is also increasing, and all this will continue," Kochhar said.

Car sales are projected to decline, but a wider branch network and strong dealership connections will help ICICI grow in the segment.

"Major growth for ICICI is coming from mortgages and autos. They are actually gaining back their lost market share, but they have a long way to go," said Manish Ostwal, banking analyst with Mumbai-based brokerage KR Choksey.

Consumer lending in 2007 accounted for more than 65 percent of ICICI's assets. It reduced that by almost half after the 2008/09 financial crisis intensified but has since changed track. Its corporate loan business grew just 11 percent in the quarter ended September 30 compared with overall growth of 16 percent.

"Going forward, it will be important to see how they are able to maintain this (retail) growth and manage asset quality pressures," said Jignesh Shial, banking analyst with Mumbai-based IDBI Capital.

Indian economic growth languished near its slowest in three years at 5.5 percent in the quarter that ended in June but was slightly better than expected, signalling the worst may be over for Asia's third-largest economy.

Earlier this month, HDFC Bank ended its record of posting 30 percent on-year profit growth every quarter for the last decade due to investment losses and a squeezed net interest margin.

ICICI's net interest margin, a gauge of profitability for banks, expanded to 3.31 percent during the quarter from 3.00 percent a year earlier. It raised its guidance for the fiscal year to about 3.3 percent.

Net interest income, or the difference between interest earned and paid, rose about 20 percent to 40.4 billion rupees.

Net non-performing loans, as a percentage of total assets, rose to 0.85 percent from 0.82 percent in the prior quarter. Debt restructuring, or steps to ease payment terms for stressed borrowers, grew 15 percent on quarter.

It has a debt restructuring pipeline of 20 billion rupees so far, Kochhar told reporters, adding asset quality pressures are likely to continue.

Prolonged economic slowdown is impairing borrowers' ability to repay loans. Non-performing loans for Indian banks account for nearly 4 percent of total assets compared with a global average of 2.6 percent, according to Thomson Reuters Starmine. (Reporting by Swati Pandey; Editing by Christopher Cushing)

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Hero MotoCorp Q2 net profit rises 9 percent

New Delhi, Oct 23 (IANS) Two-wheeler maker Hero MotoCorp Wednesday reported a 9.07 percent increase in its second quarter net profit which stood at Rs.481 crore from Rs.441 crore in the corresponding quarter of the 2012-13.

The company's turnover which includes proceeds from net sales and other operating income rose by 10.39 percent to Rs.5,726 crore from Rs.5,187 crore reported in the second quarter of last fiscal.

The firm's EBIDTA (earnings before interest, tax, depreciation and amortisation) margin stood at 14.5 percent. Sales during the quarter under review stood at 1,416,276 units.

"With our performance in the second quarter, we have clearly demonstrated that we can have good margins even as we strengthen our market leadership," said Pawan Munjal, managing director and chief executive, Hero MotoCorp said in a statement.

"Rupee depreciation has pulled up the costs of essential commodities. Going forward, these higher input prices, combined with increasing labour costs, are likely to put a lot of pressure on margins in the industry."

The company said that it is hopeful of achieving healthy sales during the ongoing festive season.

"Sentiments are positive and there is a momentum for us in the market, and we are definitely looking at demonstrating our leadership by record dispatch and retail sales during the festive period," Munjal added.

Recently, the two-wheeler manufacturer unveiled 15 new models of its motorcycles and scooters which will be launched during the current fiscal.

The company is also trying to spur up its in-house technology development at its research and development (R&D) centre and has also tied up with three international companies for technology alliances.

Hero MotoCorp can use erstwhile partner Honda's technology inputs till 2014. Both the companies ended there 27-year-old joint venture two years ago.

The two-wheeler major which is currently on an international expansion drive after ending its JV with Honda, hopes to enter markets in Turkey and Egypt soon.

In the short-term, the company plans to launch its brand of products in 10 more international markets by the end of this year.

In the long term, the company envisions an annual production capacity of 12 million units per year manufactured in over 20 facilities across the globe.

The company also aims to have a turnover of Rs.60,000 crore per annum by 2020 from last fiscal's turnover of around Rs.25,000 crore.

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Boeing raises forecast as quarterly profit jumps; defense weak

By Alwyn Scott

REUTERS - Boeing Co reported a surprising 12 percent jump in quarterly profit and raised its full-year forecast on soaring commercial aircraft production and margins, sending its shares up as much as 6 percent to an all-time high.

The company also said on Wednesday that it will speed up production of its 787 Dreamliner, a long-awaited move that comes after a series of problems with the new, high-tech plane, and while Boeing is still pushing to improve the jet's reliability.

The strong third-quarter results from the commercial airplane business, which churned out more planes at higher profit margins in the quarter, compensated for weakness in the defense unit, where revenue rose just 3 percent, margins contracted and profit fell.

The commercial aircraft gains showed Boeing was not only on target to deliver a record number of jetliners this year, but was producing them efficiently.

But the optimism was tempered by continuing 787 problems, by the loss of a key order in Japan earlier this month, and by the prospect that profit margins will fall in the current quarter.

"Obviously that's a campaign that we did not want to lose," Boeing Chief Executive Jim McNerney said in a conference call, referring to rival Airbus' win of an order from longtime Boeing customer Japan Airlines Co Ltd .

"We will take it as a sign to try harder and do better," he said, noting that Boeing recently won an order for 34 of its forthcoming 777-9X jet from Deutsche Lufthansa AG . Lufthansa contracted at the same time to buy 25 Airbus A350s.

McNerney said the reliability of the 787 was averaging 97 percent, a decrease from 98.2 percent that Boeing cited in June, during a congressional hearing on the 787's burning battery problem, which prompted regulators to ground the plane for more three months earlier this year.

"We still have some customers that are not at that level (of 97 percent)," McNerney said on Wednesday. "It's frustrating."

False error messages account for about one-third of the reliability problems, he added. Boeing is putting people and spare parts around the world to help fix 787s quickly. The latest reliability concerns arose after Norwegian Air Shuttle took its new 787 out of service for repairs because of repeated problems.

MARGIN AT RISK

Boeing's commercial aircraft operating margin jumped to 11.6 percent in the latest quarter from 9.5 percent a year ago. But the gain begged the question of "whether this is a 'one off', or whether such levels can be sustained," analyst Robert Stallard at RBC Capital Markets wrote in a note.

On the conference call, Chief Financial Officer Greg Smith said the commercial airplane operating margin may soften in the current quarter.

"We expect fourth-quarter margins to be influenced by dilution from the (low margin) 787 deliveries, higher (research and development) primarily associated with the 737 MAX and timing of supplier payments," Smith said. Investments to lift production rates also will weigh on margins, he said.

The 787 margin rose from near zero to "very low single digits" in the third quarter as Boeing expanded the number of airplanes use to calculate costs by 200, to 1,300, and included the cost of 787-10 development.

After the conference call, Boeing stock declined from its early highs. The stock was up 5 percent at $128.63 in afternoon trading on the New York Stock Exchange after rising as much as 6.2 percent to $129.99.

"Clearly the 787 will be more detrimental for margins," said Ken Herbert, analyst at Canaccord Genuity Inc.

In contrast with the booming jetliner business, Boeing's defense operations were weakened by declining U.S. government spending, a charge to close the C-17 transport plane production line and other factors.

Military aircraft revenue fell 5 percent to $3.5 billion. Overall defense, space and security revenue rose to $8 billion from $7.8 billion, but operating margins contracted to 7.4 percent from 10.5 percent. Earnings in that division fell 19 percent to $673 million.

GUIDANCE RISES

Third quarter net income rose 12 percent to $1.51 a share from $1.35 a year ago as revenue increased 11 percent to $22.13 billion, Boeing said. The gain came largely from a 14 percent surge in deliveries to 170 aircraft in the quarter.

Core earnings, which exclude some pension and post-retirement costs, jumped 16 percent to $1.80 a share from $1.55.

The core earnings and revenue results topped analysts' average expectations of $1.55 a share and revenue of $21.68 billion, according to Thomson Reuters I/B/E/S.

Boeing raised its full-year core earnings forecast to between $6.50 and $6.65 a share from a previous outlook of $6.20 to $6.40.

"Simple takeaway is stay long," on the stock, Peter Arment, an analyst at brokerage Sterne Agee, wrote in a note. "We remain buyers at current levels given our long-term targets" of $164 on Boeing stock.

In a long-anticipated move, Boeing said it would increase production of the 787 Dreamliner to 12 aircraft per month in 2016, up from a target to 10 per month by the end of 2013. It plans to produce 14 per month before the end of the decade.

The plane has suffered a number of technical glitches during its first two years in service, including overheating batteries that grounded the worldwide fleet for more than three months earlier this year.

Rising production increases revenue and cash flow. But "given that it doesn't kick in till 2016, the benefits of this remains some way off," RBC Capital's Stallard wrote.

Boeing left unchanged its full-year revenue forecast at between $83 billion and $86 billion, and its target for delivering between 635 and 645 jetliners this year.

In the first nine months, Boeing delivered 476 planes, including 170 in the latest quarter. That means it needs to deliver 169 in the fourth quarter to hit its top target.

McNerney said Boeing expected to start work on its 777-X models later this year, cementing those long-awaited revamps of its best-selling wide-body plane, due to enter service by 2020. Industry experts widely expect that launch to coincide with major orders at the Dubai Airshow next month.

(Reporting by Alwyn Scott in New York; Editing by Gerald E. McCormick, Jeffrey Benkoe and Tim Dobbyn)

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Hero MotoCorp Q2 profit rises 9 pct, beats estimates

By Aradhana Aravindan

MUMBAI (Reuters) - Hero MotoCorp Ltd , which posted its first profit gain in five quarters, aims to sell motorcycles in eight more overseas markets by March to ramp up its export earnings in response to an increasingly combative home market.

Hero, like rival Bajaj Auto Ltd , has been pushing sales abroad to make up for shrinking market share in India. It plans for exports to account for 10 percent of sales in the next four to five years.

"Now we are in 10 overseas markets, and we are getting into a rapid launch phase in the second half and we plan to add eight more markets in the next six months," Anil Dua, senior vice president of sales and marketing, told Reuters. "We expect (exports) to be flat in the second half. In the next year we expect them to really start growing."

India's largest maker of two-wheeled vehicles reported on Wednesday net profit of 4.81 billion rupees for the fiscal second quarter ended September 30. That compared with 4.41 billion rupees a year earlier, and the 4.63 billion rupees mean estimate of 14 analysts according to Thomson Reuters I/B/E/S.

Sales rose 11 percent to 57 billion rupees, matching analyst estimates. In volume terms, sales rose 6 percent from a year earlier, when the company reduced production to adjust its inventory.

The company attributed the gain primarily to a low comparison base and increased shipments ahead of the September-December festive season when many Indians consider it auspicious to buy big-ticket items such as vehicles.

"The sentiments are positive and there is a momentum for us in the market," CEO Pawan Munjal said in a statement, adding that rising input and labour costs could pressure margins in the auto industry.

OVERSEAS PRESENCE

Hero's overseas presence pales in comparison to Bajaj, India's biggest motorcycle exporter.

So far in the fiscal year started April, Hero's overseas two-wheeler sales were about one-tenth those of Bajaj, or 2 percent of total sales compared with 37 percent for Bajaj, data from the Society of Indian Automobile Manufacturers (SIAM) shows.

Hero started selling vehicles in Kenya, Burkina Faso and Ivory Coast in July. It has since launched operations in Peru.

The two-wheeler market comprises motorcycles and scooters which are often used in India as family vehicles. Hero's market share was 41.5 percent at September-end from 42.7 percent a year earlier, while Honda Motor Co Ltd's local unit had a 22.7 percent share, up from 19.0 percent, according to SIAM. Bajaj, which does not make scooters, accounts for 15.4 percent.

Last week, Bajaj reported profit which beat analyst estimates as a weaker rupee gave its export earnings a boost.

(Reporting by Aradhana Aravindan in Mumbai; Editing by Christopher Cushing)

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Novartis lifts profit forecast for second quarter in a row

By Caroline Copley

ZURICH (Reuters) - Swiss drugmaker Novartis raised its full-year sales and profit forecasts for a second quarter in a row on Tuesday, as it benefited from delays to a cheap, copycat competitor to one of its best-selling drugs, blood pressure pill Diovan.

Novartis lost its patent rights on Diovan in the United States last year and already faces some generic competition. But it has been granted a partial reprieve as U.S. regulators have not yet approved a generic version of one of the main forms the treatment from India's Ranbaxy Laboratories .

Basel-based Novartis expects full-year sales to grow by a low to mid single-digit percentage in constant currencies, and core earnings to be in line or better than the previous year.

It had previously guided for a low single digit percentage decline in core earnings, and low single digit sales growth.

However, the company cautioned the delay in a generic competitor to Diovan would push the hit from that into 2014.

Analysts at Berenberg said Novartis had reported a good set of numbers but noted the upgrade was not due to fundamental outperformance in its underlying business and would be viewed as a one-off.

Shares in Novartis - which trade at 13.6 times forecast earnings, a discount to cross-town rival Roche's 15.4 times - were up 1 percent to 68.55 francs at 0925 GMT compared with a 0.3 percent firmer European drugs sector <.sxdp>.

Novartis has used the reprieve from full competition to Diovan to funnel more money into research and development.

Chief Executive Joe Jimenez told reporters that R&D spending, at around 22 percent of sales in the third quarter, was at the higher end of where the company would like it to be.

He said the firm was scrutinising its pipeline to prioritise the most promising molecules and would consider partnership or licensing deals for some lower priority compounds.

STRATEGIC REVIEW

New Chairman Joerg Reinhardt launched a strategic review of some of Novartis' business units in August, and Jimenez said the company was still considering options for its divisions that lack global scale and critical mass.

Citi analyst Andrew Baum suggested the animal health unit could be on the block, given the announcement that George Gunn, who heads the unit, will hand over his separate corporate responsibility role to Juergen Brokatzky-Geiger.

Baum estimates the division, which has annual sales of around $1.3 billion, could have an enterprise value (equity plus debt) of roughly $4 billion.

Novartis' net sales rose 4 percent in the third quarter to $14.34 billion, in line with the average analyst forecast for $14.32 billion in a Reuters poll. Core earnings per share fell 4 percent to $1.26, missing the $1.29 mean estimate.

Adverse foreign exchange rates shaved 6 percentage points off third quarter core operating income, with the company hit in particular by a sharp slide in emerging market currencies and a weaker Japanese yen.

The group is pinning its hopes on emerging markets and sales in China grew 18 percent in the three months to the end of September, at a slower pace than the 25 percent seen in the second quarter.

A crackdown on bribery is expected to hit promotional sales at many Western drugmakers in China, with GlaxoSmithKline - at the centre of the bribery allegations - expected to feel the biggest impact.

Jimenez said market growth for the industry in China was weaker as hospitals limit access to sales reps, but added he did not expect the slowdown to be permanent.

Last week, Roche said its focus on speciality cancer drugs, which are generally paid for privately, had helped shield it from the slowdown.

(Editing by David Cowell and Mark Potter)

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Goldman Sachs profit falls 2 pct as trading revenue slumps

REUTERS - Goldman Sachs Group Inc's third-quarter profit fell 2 percent as weak bond-trading volumes hit revenue in its biggest business, pushing down the bank's shares in premarket trade.

Revenue from Goldman's fixed income, currency and commodities (FICC) business, which undertakes trading for clients, fell 44 percent to $1.25 billion in the quarter ended September 30.

The fifth-largest U.S. bank by assets reported a profit of $1.43 billion, or $2.88 per share, beating the average analyst estimate of $2.43, according to Thomson Reuters I/B/E/S.

In the year-earlier period, the bank earned $1.46 billion, or $2.85 per share.

Goldman's shares fell 2.5 percent to $158.23 in premarket trading despite the stronger-than-expected earnings and an increase in quarterly dividend to 55 cents per share from 50.

"The third quarter's results reflected a period of slow client activity," Chairman and Chief Executive Lloyd Blankfein said in a statement.

Fixed-income trading was muted for several weeks leading up to the Federal Reserve's meeting in mid-September amid speculation that the central bank was about to start winding down its bond-buying stimulus program.

Goldman was not the only Wall Street bank to be stung by weak fixed-income trading. However, it is more reliant on trading income than its bigger rivals, which have significant consumer banking operations.

JPMorgan Chase & Co's trading revenue fell 8 percent in the latest quarter, while Citigroup Inc's dropped 26 percent and Bank of America Corp's about 20 percent.

Revenue from Goldman's own investments also fell. Revenue from loans and principal investments slid 18 percent to $1.48 billion.

Equity trading revenue dropped 18 percent to $1.62 billion, while investment banking advisory revenue slid 17 percent to $423 million. However, underwriting revenue rose 13 percent $743 million.

(Reporting by Lauren Tara LaCapra in New York and Tanya Agrawal in Bangalore; Editing by Ted Kerr)

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HDFC profit rises 10 percent to Rs.1,266 crore

Mumbai, Oct 21 (IANS) India's largest mortgage lender Housing Development Finance Corporation (HDFC) Monday said its net profit rose by 10 percent to Rs.1,266.33 crore in July-September quarter.

The company's total income rose to Rs.5,953.98 crore for the quarter ended Sep 30, as compared to Rs.5,277.2 crore recorded in the corresponding quarter of last year.

HDFC's income from main business of home loans to individuals and builders jumped by 13 percent. This was the main driver of the company's profitability and income.

HDFC share price Monday rose 0.23 percent to Rs.820.45 at the Bombay Stock Exchange.

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Bank of America posts profit as fewer loans go bad

By Peter Rudegeair

REUTERS - Bank of America Corp on Wednesday posted a quarterly shareholder profit of $2.22 billion, reversing a year-earlier loss, as fewer loans went bad.

The bank's loan portfolio performed better, but results deteriorated in three of its five major businesses - consumer real estate, commercial and investment banking, and sales and trading.

Chief Executive Brian Moynihan has been struggling to put the bank's legal problems behind it and start building revenue. Excluding gains and losses from changes in the value of the bank's debt, revenue in the third quarter fell 1.5 percent to $22.19 billion.

The second-largest U.S. bank earned 20 cents per share, beating analysts' average estimate of 18 cents, according to Thomson Reuters I/B/E/S.

In the year-earlier quarter, the bank recorded a net loss attributable to common shareholders of $33 million due to accounting adjustments, litigation expenses and tax charges.

In the latest quarter the bank was helped by the improved performance of its loan portfolio. It wrote off $1.69 billion of loans, down from $4.12 billion a year earlier.

With loans performing better and delinquencies falling across all consumer portfolios, Bank of America set aside $296 million to cover bad loans, compared with $1.77 billion in the same quarter last year.

Sales and trading revenue for the bank's fixed income, currency and commodities business, excluding an accounting adjustment, fell by $501 million to $2.0 billion due to lower bond-trading volumes for much of the quarter.

Fixed-income traders were inactive for several weeks leading up to the Federal Reserve's meeting in mid-September in the expectation that the central bank would announce that it was starting to wind down its bond-buying stimulus program.

Bank of America sold its remaining stake in China Construction Bank Corp for $1.47 billion in September, contributing $750 million pre-tax to the bottom line.

Bank of America shares have risen 23 percent this year, in line with gains in the KBW index of bank stocks <.bkx>. The shares were little changed in premarket trading after closing at $14.24 on Tuesday.

(For a graphic comparing the share price performance of BofA, Citigroup and JPMorgan, click http://link.reuters.com/hyj83v)

(Reporting by Peter Rudegeair in New York; Additional reporting by Anil D'Silva in Bangalore; Editing by John Wallace)

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HDFC Bank quarterly profit growth slowest in a decade

MUMBAI (Reuters) - India's third-biggest lender by assets HDFC Bank posted its slowest quarterly profit growth in a decade due to a drop in net interest margins and losses in its investment portfolio, sending the bank's shares down as much as 3 percent.

HDFC Bank's conservative lending has helped it outperform local peers struggling with rising bad loans such as State Bank of India (SBI) and ICICI Bank . Until the quarter ended September, HDFC had reported quarterly profit growth exceeding 30 percent for the last decade.

Net profit rose 27 percent from a year earlier to 19.8 billion rupees in the quarter ended September 30, HDFC Bank said on Tuesday. That was in line with analysts' expectations, according to Thomson Reuters I/B/E/S.

While net interest income gained nearly 15 percent to 44.8 billion rupees, the bank's loan book grew at a slower pace than expected by some analysts as the economy expanded the least in a decade. HDFC Bank's net interest margin, which measures loan profitability, also shrank.

Analysts expect the coming quarters to remain subdued for Indian lenders, including HDFC Bank, which has a forward 12-month price to earnings ratio of 16.6 times, the highest among the country's big banks.

"There are two major worries - loan book growth has been in line with the system, although they had guided for faster growth," said Manish Ostwal, banking analyst at Mumbai-based brokerage KR Choksey.

"Secondly, margins have declined on a sequential basis. That shows that newer business is being done at lower margins and its ability to pass on costs is not so strong."

The bank's loan book grew 16 percent from a year earlier, while net interest margin narrowed to 4.3 percent from 4.6 percent in the previous quarter and 4.4 percent a year earlier.

HDFC Bank cut lending rates to attract borrowers ahead of the festive season in October-November but kept deposit rates high to retain savings in a tight liquidity environment.

Asset quality at India's third-biggest lender behind SBI and ICICI also worsened. Gross nonperforming loans as a percentage of total assets rose to 1.1 percent from 0.9 percent a year earlier, HDFC Bank said.

The bank also posted a 1.03 billion rupee loss in its treasury income, or the return on investments in bonds and other financial instruments. That compares with a gain of 485 million rupees a year earlier.

HDFC Bank booked mark-to-market losses on its bond portfolio in the second quarter as market yields rose 133 basis points. Emergency measures by India's central bank in mid-July to support the rupee led to a spike in bond yields.

(Reporting by Swati Pandey; Additional reporting by Reshma Apte in BANGALORE; Editing by Ryan Woo)

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