IndusInd Bank's Q4 profit slumps 77% QoQ to Rs 302 cr, provisions jump 2x

IndusInd Bank on Monday reported a 77 per cent sequential decline in standalone net profit at Rs 301.84 crore in the March quarter of FY20 (Q4FY20), against Rs 1,300.2 crore clocked in the December quarter of current fiscal (Q3FY20). On a consolidated basis, the net profit was Rs 315.25 crore.

The bank’s earnings are not comparable on a yearly basis owing to its merger with Bharat Financial in July, 2019. In Q4FY19, the PAT stood at Rs 360.1 crore. 

The numbers met Street estimates that had anticipated an over 70 per cent QoQ decline in net profit.

Analysts at Nomura, for instance, had estimated the bank’s PAT to plummet 76 per cent QoQ to Rs 310.6 crore. READ HERE

The lender, which reported its first quarterly result since its new chief executive officer (CEO) Sumant Kathpalia took over, set aside massive provisions at Rs 2,440 crore. It was a 133.82 per cent jump from Rs 1,043.5 crore provided for in Q3FY20. 

To cushion against the uncertainties arising due to the outbreak of the coronavirus (Covid-19) pandemic, the bank has provided for Rs 260 crore under the provisions and contigencies segment.

"The extent to which Covid-19 pandemic will impact the bank's operations and financial results is dependent on the future developments, which are highly uncertain. In this backdrop, during the quarter and year ended March 31 2020, the Bank has made a counter cyclical buffer/ floating provision of Rs 260 crores," it said.

Besides, in light of the moratorium extended by the Reserve Bank of India (RBI) with regards to providing relief to borrowers on account of Covid-19 pandemic, the bank has set aside provision of Rs 23 crores during the quarter and year ended March 31, 2020. 

The Mumbai-based private lender’s net interest income (NII) stood at Rs 3,231.2 crore during the recently concluded quarter, up 5.1 per cent from Rs 3,074.02 crore clocked in Q3FY20.

The bank’s asset quality, too, worsened during the quarter under review. The gross non-performing assets (GNPA) came in at Rs 5,146.74 crore, up from Rs 4,578.43 crore reported in Q3FY20. In terms of ratio, the number rose 27 bps to 2.45 per cent from 2.18 per cent.

On the other hand, net NPA (NNPA) came in at Rs 1,886.58 crore, compared with Rs 2,173.29 crore in Q3FY20. The ratio came in at 0.91 per cent, down from 1.05 per cent reported in Q3FY20.

"During the quarter ended December 31,2019, the bank recognised exposure in respect of two entities with an outstanding of Rs. 960.89 crores as fraud," the bank said in a statement, without disclosing the names of the entities. 

In accordance with the regulations of the RBI, the bank has charged to the Profit and Loss account an amount of Rs.240.22 crores during the quarter ended March 31, 2020 and a total amount of Rs.480.44 crores during the year ended March 31,2020, it added. 

Analysts at ICICI Securities had anticipated the Rs 8,800 crore-exposure to the telecom sector to cast shadow over the bank’s asset quality. That apart, slowdown in the MFI and commercial vehicle (CV) sectors could further aggravate the bank’s non-performing assets (NPA), they had said.

The counter closed 6 per cent higher at Rs 407.35 apiece on the BSE, as against a 1 per cent gain in the benchmark S&P BSE Sensex.