NII growth helps Indusind post 26% jump in Q1 net at Rs 836 cr

Midsize private sector lender Indusind Bank today reported a 26 per cent increase in the June quarter net at Rs 836.55 crore, helped by a healthy rise in the core interest income.
The bank had reported a post tax profit of Rs 661.38 crore for the April-June period last year.
Its core net interest income jumped 31 per cent to Rs 1,774.06 crore for the reporting period, while the non- interest income grew 20 per cent to Rs 1,167.26 crore helped by a 25 per cent rise in fee income at Rs 974.04 crore.
The bank had a Rs 122 crore write-back of provisions made for its exposure to the Jaypee Cement account in the preceding quarter, but chose not to take advantage of the same in the profit statement.

The write-back was the result of the consummation of the Rs 16,000-crore acquisition of Jaypee by Ultra tech.
Its managing director Ramesh Sobti said it has created a Rs 70 crore floating provision, continues to retain Rs 33 crore as a part of the loan is yet to be repaid by Ultratech, while Rs 20 crore was set aside as accelerated provisions for its exposure to the micro lending segment and security receipts

on sales to asset resolution companies.
The bank has a Rs 50 crore exposure to three of the 12 big NPA accounts identified by the Reserve Bank for resolution under the provisions of the Insolvency and Bankruptcy Code but has sufficient provisions against those, Sobti said, adding all the provisioning was done in the April-June period.

He said while two accounts have a 100 per cent provision, one has the necessary 50 per cent money set aside.
Its gross non performing assets ratio rose to 1.09 per cent from the 0.91 per cent in the year-ago period, but Sobti said this is largely due to two restructured accounts slipping into NPA.
Its total provisions rose to Rs 310 crore in June quarter from Rs 230 crore in the year ago, which was attributed to loan growth.
The bank notched a 24 per cent rise in credit and 31 per cent jump in deposits during the reporting quarter. Share of low-cost current and savings account deposits improved to 38 per cent of the base on a 65 per cent growth in saving account deposits.

The credit growth was largely to fulfil working capital requirements and refinance, Sobti said, adding the crucial capital expenditure is still missing in the economy.
He said capex demand is being generated by solar and wind sectors in the renewables space and a few transmission projects.
The net interest margin was stable at 4 per cent and Sobti hinted that it will be maintained at the same level as the bank is satisfied with the spread.
The bank's capital adequacy ratio improved to 16.18 per cent from the year-ago's 15.42 per cent on a Rs 1,000 crore additional tier-I bond raising and also increasing the share of the capital conserving low risk weight assets.

Sobti said the introduction of GST and BS-IV emission norms hit truck supply and its lending in the segment and added that it expects the September quarter also to be subdued in this segment.
The non-vehicle consumer credit will grow 35-40 per cent during the fiscal, he said, adding that demand is high in this segment.
Its diamond financing book, acquired from ABN Amro Bank, is performing well and will grow up to 20 per cent in FY18 over the present Rs 7,100 crore, he said.
When asked about speculation of it acquiring Bharat Financial Inclusion, Sobti said the bank keeps exploring various inorganic growth opportunities continuously but is yet to take any alternative to its board.

The bank scrip shed 0.04 per cent to close at Rs 1,559.25 a piece on BSE, as against gains of 0.10 per cent on the benchmark.