IndusInd Bank net profit jumps 194% in March quarter on low provisions

IndusInd Bank on Friday reported a 194 per cent jump in year-on-year profit on a consolidated basis, as it lowered provisions and went slow on loan growth.
 
The profit after tax grew to Rs 926 crore, from Rs 315 crore in the year-ago period. While its net interest income grew 9 per cent to Rs 3,535 crore, provisions and contingencies came down 24 per cent to Rs 1,866 crore.
 
The gross non-performing assets (NPA) fell to 2.67 per cent of the advances in the quarter, from 2.93 per cent in the third quarter, including proforma NPAs, even as net NPA, arrived after provisioning, was flat at 0.69 per cent. The provision coverage ratio was at 75 per cent at the end of the year.

 

On a full-year basis, the bank’s net profit was down 34 per cent to Rs 2,930 crore, but the net interest margin slightly improved at 4.17 per cent.
 
Bank’s MD and CEO Sumant Kathpalia said in a call with the media that the net interest margin came under pressure due to idle cash of about Rs 10,000 crore.
The bank grew its loan book by just 3 per cent in the year, even as its deposit jumped 27 per cent.
 
About 43 per cent of the bank’s book consisted of corporate loans, whereas 57 per cent consisted of retail, vehicle, and microfinance loans.

In the quarter, the bank wrote of Rs 1,350 crore of its debt, and recovered Rs 968 crore, which included a sale to an asset reconstruction company of Rs 830 crore.
 
Kathpalia did not want to give any guidance for the current financial year considering uncertainties surrounding the covid situation.
However, he said the first 15 days of April the bank had a “very good growth”, which has slowed now because of the Covid situation.
 
“Giving any forecast right now is a little bit difficult,” Kathpalia said.
The bank’s collection efficiency was about 98 per cent in the fourth quarter, he said.

 
“When the economic recovery happens, both vehicle finance and microfinance will pick up. There is demand in the agriculture segment, and we expect a good monsoon. We are very comfortable with the microfinance segment,” Kathpalia said.