While Wall Street firms like JPMorgan Chase (NYSE: JPM) and Lehman Brothers (NYSE: LEH) have had to take large subprime-related writedowns against earnings in recent quarters, India's HDFC Bank (NYSE: HDB) keeps blowing away its skeptics with successive years of high-octane, high-quality growth.

HDFC Bank ended its latest financial year in March with a whopping 39% growth in net profit to nearly $400 million, well above the strong pace of 31% annual growth over the past five years. Net revenue grew an amazing 50% to about $1.9 billion, defying repeated attempts by the Reserve Bank of India to cool the economy. And all this comes during what's supposed be a slowdown!

This bank is also a standout on operating efficiency and high asset quality, comparing favorably to top U.S. banks like Bank of America (NYSE: BAC) and Washington Mutual. Many Western banks would give their eyeteeth for a non-performing asset ratio of 0.4%, which shows how careful HDFC is about how it grows. What's more, its juicy net interest margin of 4.4% for the quarter is nearly double that of its nearest competitor, ICICI Bank (NYSE: IBN), proving that HDFC keeps an eagle eye on the cost of its high-octane growth.

India' s No. 1 private banking network
With its recent $2.4 billion acquisition of India's Centurion Bank of Punjab, HDFC Bank now has India's largest privately owned banking network, boasting more than 1,100 branches. Indian banks must get government approval to add branches, so this is a savvy strategic move, increasing the company's customer base by nearly a third almost overnight to 13 million.

It looks even smarter against the backdrop of many global players having taken stakes in Indian banks, anticipating banking liberalisation early next year. For example, Citigroup (NYSE: C) holds nearly 12% of Housing Development Finance Corp., a holding company with a 23% stake in HDFC Bank, as well as more than 4% of Axis Bank. A unit of Merrill Lynch (NYSE: MER) owns more than 1% of Vysya Bank.

So what's the catch?
In the short term, HDFC Bank will be challenged to maintain high growth rates in a slowing global economy. Annual growth in loans has already wilted under Reserve Bank pressure, to 22% for the quarter from 29% a year earlier. Yet even with these constraints, HDFC has shown a competitive advantage: In the key retail lending segment, rival ICICI reported a paltry 3% loan growth for its fiscal year, compared to HDFC's 39%.

Also, HDFC Bank's rapid growth has come at a price. Operating costs have risen at an annual rate of 42% over the past five years, with a 55% increase during fiscal 2008. That's obviously not a sustainable strategy if and when its rate of growth slows from a gallop to a canter.

Gutsy leadership
Still, these days, it's rare to come across a fast-growing company that's fussy about the quality of its growth. Thus it's very reassuring to know that HDFC Bank's executive director, Paresh Sukthankar, has the guts to focus on the quality of his bank's growth prospects: "As long as that incremental growth comes with the same margins and asset quality that we're comfortable with, I'd imagine that the core growth that we'd like to target in terms of loans and overall assets will be in the same 25%-30% range."

With a leadership that truly walks the talk, this is one growth opportunity definitely worth banking on.

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