IndusInd Bank Q1 FY25 results: Net profit up 2% due to higher provisions

IndusInd Bank's net profit was nearly flat for the June quarter (Q1) of 2024-25, increasing by only 2 per cent year-on-year (Y-o-Y) to Rs 2,171 crore due to higher provisions. 

Sequentially, the lender's net profit was down 8 per cent from Rs 2,349 crore in Q4FY24.

The private-sector lender’s net interest income (NII) grew 11 per cent Y-o-Y at Rs 5,408 crore in Q1 while other income increased 10 per cent to Rs 2,441 crore during the same period. Net interest margin – a measure of profitability of banks – was flat at 4.25 per cent in Q1.

The bank's gross non-performing asset (NPA) ratio inched up 10 basis points (bps) sequentially to 2.02 per cent in Q1FY25 and net NPA ratio rose 3 bps to 0.60 per cent in the period.

Gross slippages of the bank stood at Rs 1,536 crore, with Rs 1,488 crore coming from the consumer book. In Q4FY24, the gross slippages were Rs 1,428 crore.

Provisions and contingencies saw a rise of 6 per cent Y-o-Y and 10 per cent sequentially at Rs 1,050 crore.

The lender’s advances grew 15 per cent Y-o-Y and 1 per cent sequentially to Rs 3.47 trillion, while deposits rose 15 per cent Y-o-Y and 4 per cent sequentially to Rs 3.98 trillion.

The Mumbai-headquartered bank maintained traction on retail deposit mobilisation, with retail deposits according to liquidity coverage ratio growing 16 per cent on year ahead of loan growth. 

Increase in cost of deposits by 5 bps sequentially also remained under control despite ongoing liquidity conditions, said Sumant Kathpalia, managing director and chief executive officer, IndusInd Bank. He said loan growth was driven by 18 per cent Y-o-Y growth in retail loans and 13 per cent Y-o-Y growth in corporate loans.

The bank's unsecured loan book saw contraction during the quarter under review. However, it remained committed to its stated intent that its unsecured loan book would be about 6 per cent.

“Collections and cautious disbursements were key focus areas during the quarter, given the external disturbances. As a result, we were able to improve the gross slippage ratio in an otherwise challenging quarter. The bank has not utilised any amount from the contingency buffers during this quarter," Kathpalia said.

The annualised credit cost of the bank stood at 121 bps, without using contingent provisions. “We are confident of achieving a full year credit cost of 110–130 bps, given that the turbulent seasonally weak quarter is behind, with credit cost outcome within our expected range,” he said.

“There are two portfolios that contribute to about 38 per cent of our book – MFI business and vehicle finance business. The disbursements this quarter were lower because of the elections and the heat wave in the rural areas. We are seeing progress in these two areas and we should see a better Q2 in terms of disbursements in these two domains,” Kathpalia added.