IndusInd net grows 31% on healthy fee income

Private sector lender IndusInd bank has reported 31 per cent rise in net profit to Rs 236.26 crore in the quarter ended June on account of rise in fee income.

The fee income of the Hinduja Group-owned bank has grown 44 per cent to Rs 269 crore on the back of higher revenues from investment banking advisory services, while the net interest income (NII) increased by 24 per cent to Rs 484 crore during the period under review.

NII — the difference between interest earned and interest expended — grew as the loan book swelled by 31 per cent. Deposits rose by 28 per cent year on year. The bank expects its loan book to grow by 25-30 per cent this financial year.

“Fee income is a lifeline for the bank. It will continue exceeding loan book,” said Ramesh Sobti, chief executive officer and managing director of the 1994-founded bank.

Fee income contributed 40 per cent of total income for the bank. Revenues from investment banking rose 213 per cent to Rs 31.18 crore on year-on-year basis.

Net interest margin (NIM), however, shrank by 7 basis points sequentially to 3.22 per cent and from 3.41 per cent from a year ago. “There is no relief for banks so far as cost of funds is concerned,” said Sobti, explaining the decline.

The bank, he said, would bring down its promoters’ shareholding to 10 per cent by the end 2012 from the current 19 per cent. “We have submitted a roadmap to the Reserve Bank of India on this issue. It has been approved,” he said.

The banking regulator had mandated all the private banks to submit a roadmap on reducing their promoter stake to 10 per cent.