IndusInd Bank net rises 30% in Q3 to Rs 347 cr

The operating profit rose by 37% during the same period at Rs 647 cr

Private-sector lender IndusInd Bank posted a 30 per cent rise in net profit at Rs 346.90 crore in the third quarter of FY14 compared to the year-ago period, driven by robust growth in fee income.

Expansion of margins boosted by healthy credit growth also helped the bottom line soar.

The bank’s fee income grew 30 per cent in the third quarter to Rs 427 crore. The total income of the bank grew by 22 per cent to Rs 2,623.76 crore.

The operating profit of the bank rose 37 per cent during the same period at Rs 647.36 crore. The net interest income was at Rs 730.08 crore recording a growth of 26 per cent.

The net interest margin stood at 3.65 per cent in the second quarter of FY14.

“The cost of deposits did go up, but despite that we could maintain our net interest margin,” said Sobti. Given the fact that cost of deposits are now slightly down, the bank hopes to increase the net interest margins.
The bank has absorbed MTM losses of about Rs 64 crores in this quarter. “In spite of that we have shown pretty good improvement and the improvement is pretty secular. All revenues lines are up year-on-year as well as sequentially,” said Sobti.

The other income of the bank grew by 35% to Rs 480.27 crore and was driven by a 58% y-o-y growth in foreign exchange income to Rs 130.71 crore. According to the management, the forex income was driven by two factors.

One, higher dollar borrowings by PSUs and second, the bank opened a new segment to offer Forex services in India. Management expects this revenue stream to be sustainable as it is client-based revenues. The bank's Current Account Savings Account (CASA) ratio rose to 32.16%, fuelled by a 50% growth in its savings account due to better new customer acquisitions.

The credit growth of the bank was at 24% year-on-year to Rs 52,469 crore while the deposits grew by 10% year-on-year at Rs 56,247 crore.

Jignesh Shial, Lead analyst- BFSI, IDBI Capital, says, "IndusInd bank's results have been good. The only worry for us is that margins are difficult to sustain given that cost of funds could rise from here on. Thus, we expect margins to trend down. We are cautious on asset quality. There were some hiccups on CV book (19% of total loan book). We believe asset quality pressures could increase going forward, especially in the mid corporate and CV segments. Current valuations are not pricing in negatives."