 "IndusInd Bank")
Private sector lender IndusInd Bank’s consolidated net profit jumped 50 per cent to Rs 1,242 crore in the October–December quarter (Q3) of FY22, aided by healthy net interest income and lower provisions. In the corresponding period of last year, the bank had reported a net profit of Rs 830 crore. The bank’s standalone net profit for the period was up 36 per cent to Rs 1,161 crore.
Net interest income of the lender, the difference between interest earned and interest expended, increased 11 per cent to Rs 3,794 crore in the reporting quarter while net interest margin, a measure of profitability, stood at 4.10 per cent, up 3 basis points sequentially.
Other income rose 14 per cent to Rs 1,877 crore in Q3FY22 as against Rs 1,646 crore while core fee income grew 9 per cent YoY to Rs 1,519 crore as against Rs 1,389 crore in the corresponding quarter of previous year.
Provisions and contingencies of the lender fell 11 per cent to Rs 1,654 crore In Q3FY22 as against Rs 1,853.52 crore in the year ago period. In the previous quarter, the lender had provisions to the tune of Rs 1,703.36 crore.
Asset quality of the lender improved 29 basis points sequentially as gross non-performing assets (NPAs) ratio stood at 2.48 per cent at the end of December quarter as against 2.77 per cent at the end of September quarter. Similarly, net NPAs ratio improved to 0.71 per cent as against 0.8 per cent.
The 'third wave' of Covid-19 broke out at December end, which has impacted banks' operations mildly and the level of uncertainty is currently reducing. In view of the same, the bank has made regulatory, floating, counter cyclical and/or contingent provisions, taking the total amount of such provisions to Rs 3,740 crores as of December 31, 2021, including an amount of Rs 1,365 crore in respect of borrower accounts restructured in accordance with Resolution Framework for Covid-19 related stress, the bank said.
Under Reserve Bank of India’s second covid restructuring package, the bank has restructured loans worth Rs 2,873 crore.
The lender’s advances grew 10 per cent year-on-year (YoY) and 4 per cent sequentially to Rs 2.28 trillion at the end of December quarter as against Rs 2.07 trillion in the year ago period. Deposits, on the other hand, increased by 19 per cent YoY to Rs 2.84 trillion, with low cost deposits comprising 42 per cent of the total deposits.
In November 2021, it came to light after a whistle-blower complaint that a subsidiary of the bank, Bharat Financial Inclusion, had disbursed nearly 84,000 loans without customer consent in May 2021 due to a technical glitch and the bank had said that it will conduct and independent review to fix accountability of the whole process.
The bank management, in a post earnings call on Saturday said, the bank has conducted an external and internal review of the microfinance portfolio after the whistle-blower complaint and the outcome of the internal and the external review of microfinance portfolio is as per the management expectations. But, a final report from the external consultant firm is awaited.
“Our internal review has informed us that there was one MFI product, which offered liquidity support to customers who were impacted by the second wave of covid after they cleared the existing dues. However, it was observed that cash disbursements and repayments arrears took place on the same day, which was a procedural lapse," said Sumant Kathpalia, MD&CEO, IndusInd Bank.
The bank management said they continue to believe that the product, which was launched, was approved by the bank. However, there might have been some process deviation.
“There is staff accountability that needs to be fixed for the process gap that we have found. But there will be no financial loss to the bank," Kathpalia said.
The standard loans outstanding under the product was Rs 179 crore and it has been fully provided for. The management has also evaluated a matter of possible impact on asset classification, revenue recognition and provisioning. Further evaluation also included factors which could lead to regulatory issues and they have been already addressed adequately, Kathpalia added.
All MFI products require disbursement of loans with a biometric and OTP consent from the customer. It is confirmed that the disbursement of loans, without client consent getting recorded, was because of a system issue. The standard loans which are outstanding out of the 84,000 loans is about Rs 7 crore, and has been fully provided for, Kathpalia added.
