IndusInd Bank tumbles over 13% in five days

IndusInd Bank declined 1.3% to Rs 1335, extending losses for fifth consecutive session as worsening in asset quality, spike in provisions and fresh slippages worried investors.

The result was announced during market hours on Tuesday, 14 January 2020. Following the result announcement, the stock fell 3.85% to end at Rs 1,481.10 on Tuesday. The stock has fallen 13.34% in five sessions from its closing high of Rs 1540.45 on 13 January 2020.

The stock has tumbled 11.86% in last one year as compared to a 11.8% rally in Nifty 50 index and a 13.39% spurt in the Nifty Bank index.

IndusInd Bank's net profit rose 32% Rs 1300.20 crore in Q3 December 2019 from Rs 985.03 crore in Q3 December 2018. Net interest income jumped 34.35% year-on-year (YoY) to Rs 3074 crore in Q3 December 2019.

The bank's provisions and contingencies (excluding tax provisions) jumped 72% to Rs 1043.45 crore in Q3 December 2019 over Q3 December 2018. The figure rose 41.44% in Q3 December 2019 compared with Rs 737.71 in Q2 September 2019.

The Supreme Court on Thursday (16 January) rejected pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices to review the 24 October verdict that widened the definition of adjusted gross revenue (AGR), leaving the three telcos collectively facing more than Rs 1.02 lakh crore in additional licence fees, spectrum usage charges (SUC), penalties and interest.

The order raises risks for lenders to the companies as payment of the dues may erode the telecom operators' cash flows and their ability to service their debt.

In a conference call on 14 January 2020, the bank classified exposure to couple of account from housing financing company (HFC) and a travel segment as fraud in Q3 December 2019. The travel sector account was recognized as non-performing assets (NPA), while HFC sector account had exposure through investment book. The bank has provided 25% or Rs 240 crore for fraud through profit and loss (P&L) and 75% or Rs 720 crore was drawn down from the reserves. The drawn down amount shall be debited to P&L equally over the next 3 quarters.

The fresh slippages of loans increased to Rs 1945 crore in Q3, of which Rs 1237 crore came from the corporate book with slippages above Rs 100 crore included a travel company (Rs 282 crore), a diversified group from 3 stressed groups (Rs 250 crore; fully recovered), a paper company (Rs 177 crore).

In the third quarter, the bank's gross non-performing assets (NPAs) stood at Rs 4578.43 crore as on 31 December 2019 as against Rs 4370.2 crore as on 30 September 2019 and Rs 1968.15 crore as on 31 December 2018.

The ratio of gross NPAs to gross advances stood at 2.18% as on 31 December 2019 as against 2.19% as on 30 September 2019 and 1.13% as on 31 December 2018. The ratio of net NPAs to net advances stood at 1.05% as on 31 December 2019 as against 1.12% as on 30 September 2019 and 0.59% as on 31 December 2018.

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