Indusind Bank Q3 net up 29%, unaffected by demonetisation

Mid-sized private sector lender Indusind Bank today reported a 29 per cent surge in its December quarter net at Rs 750.64 crore, claiming that it was not impacted adversely by the demonetisation move.
The lender had posted a post tax profit of Rs 581.02 crore in the October-December period last year.
Its managing director Ramesh Sobti attributed the profit jump to a 35 per cent growth in the core net interest income at Rs 1,578 crore which grew on a faster decrease in cost of funds.
But for the RBI action on the cash reserve ratio, the NII would have been higher by up to Rs 40 crore, he said.

He said there was a 35 per cent increase in deposits for the bank, which included a 56 per cent jump in the low-cost savings account balances which helped the costs.
On the advances side, the bank registered a growth of 25 per cent which is five times that of the banking system, Sobti said, adding that the bank got helped majorly by the high percentage (70 per cent) of advances which are at fixed rates.

Bank went through liquidity cycles, which started with excess flow of deposits following the November 8 move to scrap Rs 500 and Rs 1,000 notes but then there was the regulation to set aside the entire new deposits as CRR, he said.

Sobti said whichever lender managed to manage the liquidity better will be able to post better performance. The bank collected Rs 11,400 crore of new deposits in scrapped notes.
He said even though there was a surge in costs because of higher outgo on cash logistics, the benefits of demonetisation move far outweigh the costs.
The loan repayments, especially from the commercial vehicle and micro borrower segments, were on track, he said, adding in a few instances it has come across NPAs and written-off borrowers returning money as well.
The loan demand was also not affected, Sobti said, admitting that there was a blip in the first fortnight since demonetisation.

The net interest margin could be maintained at 4 per
cent and will endeavour to sustain it at same levels, Sobti said.
The bank was able to maintain asset quality and is on track to meet its FY17 target of containing credit costs under 0.60 per cent, he said.
The gross non-performing assets ratio stood at 0.94 per cent as against 0.82 per cent in the year-ago period, while the total provisions rose to Rs 216.85 crore from Rs 177.08 crore in the year ago period.
Sobti said all its on-site ATMs located next to a branch are operating now, while 20 per cent of the off-site ones are not but the situation is improving faster.

There has also been an increase in the quantum of suspicious activities cases reported to the financial intelligence unit, he said.
The bank scrip closed 0.19 per cent up at Rs 1,161.85 a piece on the BSE, as against a 0.65 per cent surge in the benchmark.