IndusInd Bank Q3 profit up over 29% meets street estimate

Provisioning for bad loans also decreased to Rs 98 cr as compared to Rs 126 cr in the same period last fiscal

Private sector lender IndusInd Bank has reported a 29 per cent rise in net profit to Rs 447 crore in the September-December quarter, compared with Rs 347 crore in the corresponding quarter of 2013-14, aided by higher net interest income, uptick in other income and lower provisioning.

The net profit was in line with Street expectations; a Bloomberg consensus had estimated the bank’s net profit at Rs 446 crore. Net interest income, the difference between interest income and interest expenditure, grew by 18 per cent to Rs 861 crore, compared with Rs 730 crore in the third quarter of the past financial year.

Other income, which includes gains from treasury, distribution income, was up 27 per cent to Rs 611 crore on the back of higher distribution fee from mutual funds and health insurance. In the quarter, provisioning for bad loans also decreased to Rs 98 crore, against Rs 126 crore in the corresponding period last financial year.

“This quarter, the bank delivered a good performance against a backdrop of continued economic slowdown. Growth in the bottom line is seen from improved net interest margin (NIM), diversified income streams and active cost management,” said Romesh Sobti, managing director and  chief executive officer, IndusInd Bank.

NIM in the quarter was at 3.67 per cent, against 3.65 per cent in the third quarter last year. Sobti said he was hopeful that margins would improve as the contribution from the retail segment picks up. At the end of the December quarter, the consumer finance division contributed 42 per cent, whereas corporate and commercial banking’s contribution was 58 per cent.

“We are intensely focused on reviving the trend from corporate to retail. In the next four-five quarters, we will hopefully have 50:50 contribution from corporate and retail,” said Sobti. The share of current and savings account deposits or the low-cost deposits was 34.1 per cent in December-end.

The management said despite lowering the savings account interest rate in the past quarter, the bank hasn’t seen a slowdown in customer acquisition. From September 1, IndusInd Bank had cut the interest rate on savings account to 4.5 per cent a year, against 5.5 per cent a year earlier for a daily balance of less than Rs 1 lakh.

Gross non-performing assets, as a percentage of total loans, was 1.05 per cent in the December quarter, against 1.18 per cent in the same period a year ago. Net NPA ratio declined marginally to 0.32 per cent, against 0.31 per cent in the corresponding quarter last year.

Net slippages in this quarter were at Rs 18 crore.  The bank’s capital adequacy ratio fell to 12.39 per cent from 14.38 per cent last year.

But Sobti said the bank is still well capitalised and there were no immediate fund-raising plans on the cards.