IndusInd Q2 net rises 26 pc to Rs 704 cr on core income growth

Mid-sized private sector lender IndusInd Bank today reported a 26 per cent surge in September quarter net profit at Rs 704.26 crore on healthy growth in core interest income.
The bank had recorded a net profit of Rs 560 crore in the July-September quarter of last fiscal.
Its Managing Director and Chief Executive Romesh Sobti attributed the expansion in net interest income, which rose 33 per cent to Rs 1,460.3 crore, to the expansion in net interest margins to 4 per cent.
The net interest margin widened on faster growth in the high-margin retail loans and a dip in cost of funds, he said, adding faster growth in the share of retail loans can help it expand on the key number going forward.

Composition of the high-margin retail loans, including SME advances, have grown to 48 per cent and the bank wants to take it up to equal split between retail and corporate loans, he said.
Sobti said a faster growth in deposits, which are cheaper than market borrowings, at 39 per cent also helped the spreads. Composition of deposits, wherein the low cost share has moved up to 36.53 per cent of the base, also helped.

Other income, including fees, forex and treasury operations, was up 24 per cent to Rs 970.42 crore during the reporting period.
The advances grew 26 per cent, driven by a 42 per cent growth in consumer loans, 27 per cent rise in corporate loans and an undisclosed dip in commercial vehicle loans, which had been a mainstay for the bank from the beginning, mostly to its parent company's group business under Ashok Leyland.

Sobti said the rise in consumer loans looks big, but it is helped by a lower base.
A senior official said the bank is cautious about loans against property and will be growing slower in the segment, at about 25-30 per cent.
Gross non-performing assets ratio moved up to 0.90 per cent from 0.77 per cent in the year-ago period. Similarly, net NPAs also rose to 0.37 per cent from 0.31 per cent.
The overall provisions moved up to Rs 213.88 crore from Rs 158.09 crore a year ago, and Sobti exuded confidence of maintaining credit costs within the guidance of 0.60 per cent for the fiscal.

It sold Rs 41 crore of loans to asset reconstruction companies during the quarter. Sobti said it has been able to recover 80 per cent of the loans sold to ARCs in the last four years.