 "IndusInd Bank Q3 results: PAT drops 39% to Rs 1,401 cr as provisions jump")
India's IndusInd Bank reported a slightly sharper than expected drop in third-quarter profit on Friday, as it set aside more funds to cover bad loans and as asset quality deteriorated due to stress in microfinance loans.
The private lender posted a net profit of Rs 1,401 crore ($161.89 million) for the three months ended Dec. 31, down 39% from a year ago and slightly below analysts' estimates of Rs 1,411 crore, as per data compiled by LSEG.
The bank's provisions and contingencies, or funds set aside to cover loan losses, jumped 87% to Rs 1,744 crore.
Gross non-performing assets ratio deteriorated to 2.25% from 2.11% three months earlier and 1.92% a year ago.
Indian lenders have been grappling with higher bad loans in segments such as microfinance and in the unsecured portfolio, forcing them to set aside more funds for potential losses.
Lenders typically set aside more funds to cover for potential bad loans and shield their balance sheets from future shocks.
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IndusInd's NPA in the microfinance category rose to 24.32 billion rupees from 22.59 billion rupees a quarter ago. The segment forms 9% of the bank's total loans.
IndusInd's larger peers Kotak Mahindra Bank and Axis Bank also reported sharp increases in provisions for the quarter.
IndusInd had reported higher delinquencies in its microfinance loan-book in the second quarter as well.
Its net interest income - the difference between interest earned and paid - fell to Rs 5,228 crore from Rs 5,296 crore a year earlier.
Its loans grew 12%, while deposits rose 11%. Kotak Mahindra Bank and Axis Bank reported 16% and 9% rise in advances, respectively.