IndusInd Bank Q2 Net profit up 26%

Net profit in the second quarter rose to Rs 704.26 crore from Rs 560.04 crore in the corresponding quarter last year

IndusInd Bank reported a 26 per cent rise in net profit in the June-September quarter on the back of higher net interest income and other income.

Net profit in the second quarter of this financial year rose to Rs 704.26 crore against Rs 560.04 crore in the corresponding quarter last year.

Net interest income (NII), the difference between interest earned and interest expended, increased 33 per cent to Rs 1,460.31 crore. The strong NII growth also fuelled revenue growth, which improved 29 per cent. The management said the growth in NII also came on the back of improvement in the retail portfolio.

The mix between corporate and retail now stands at 52:48 (with the business banking group included in retail). Other income that included gains from treasury, fees, etc, rose 24 per cent to Rs 970.42 crore.

The gross non-performing assets (GNPAs) of the bank increased to 0.90 per cent of advances from 0.77 per cent in the year-ago period. In the period, net NPAs rose to 0.37 per cent from 0.31 per cent. However, GNPA and net NPAs were down by one basis point on a sequential basis. The lender sold loans worth Rs 41 crore to asset reconstruction companies. They also have about a pipeline of five small accounts which would go under strategic debt restructuring. Provisions declined on a sequential basis to Rs 213.88 crore against Rs 230.47 crore in the quarter ended June as asset quality improved slightly.

Romesh Sobti, managing director & CEO, IndusInd Bank, said slippages have come down and the bank has also shown good recovery in the ARC book. “The net credit cost for the half year stands at 28 basis points. I don’t expect it to cross 60 bps for the full financial year.”

Net Interest margin, a key indicator of bank’s profitability, rose to 4 per cent for the first time.

Sobti explained that the NIMs improved as the cost of funds has come down and also because the mix of the business is improving towards the retail side which has a higher yield.

Recently, the bank also tied up with Paytm for financing two-wheeler loans and expects more such tie-ups with payments banks in the coming days.  The bank remains well capitalised with a capital adequacy ratio of 15.32 per cent.