IndusInd Q4 net up 26% at Rs 9.5 bn; divergence seen with RBI on NPA data

IndusInd Bank's net profit rose 26 per cent for the quarter ending March. It also saw a big divergence with the Reserve Bank of India's own estimate for its non-performing assets (NPAs).

Net profit rose to Rs 9.5 billion, compared with Rs 7.5 bn in the same quarter a year before. The divergence between the bank's NPA accounting and that of the central bank was Rs 10.54 bn, of which nearly Rs 5.2 bn pertains to a cement account that was repaid in July 2017. The total impact of these divergences to the gross NPA figure was Rs 1.86 bn.

Gross NPAs, as a proportion of total advances, were 1.17 per cent, a marginal rise against 1.16 per cent in the December quarter. In the year-ago quarter, it was 0.93 per cent.

Despite the recent fraud in the gems industry, IndusInd says it is confident on the diamond financing business, saying it is a high-yield one. "Of the two (problem accounts, of Nirav Modi and Gitanjali Gems), we only have exposure to one, a legacy account. We have declared it a fraud upfront and made provisions on it accordingly," said Romesh Sobti, managing director. The bank has made a 25 per cent provision against the account in this quarter and the rest of the amount would be spread across the coming ones.

 

IndusInd has a two-digit exposure to Gitanjali Gems. It had earlied said there was no direct credit exposure to Nirav Modi nor any indirect credit exposure on the basis of the controversial Letters of Undertaking issued by Punjab National Bank.

The bank's net interest income rose 20 per cent on a year-on-year basis. Net interest margin (NIM), the difference between the yield on advances and cost of funds, fell to 3.97 per cent; it was four per cent a year beforerter. The NIM aspiration remains at four per cent.

The bank's credit cost stands at 62 basis points, the impact of the divergences being two bps. The bank aims at bringing credit cost to the mid-50s for this year.

Deposits and credit grew 20 per cent to Rs 1,516 bn and 28 per cent to Rs 1,130 bn, respectively, over last year's quarter. The capital adequacy ratio at end-March was 15.03 per cent, against 15.31 per cent a year before.