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IndusInd Bank net profit up 38% in June quarter; stock falls over 1%

The bank saw an increase in its bad debt

IndusInd Bank
IndusInd Bank

Private lender IndusInd Bank on Friday reported an 18 per cent jump in its net profit at Rs 1,220 crore in the June quarter (Q1) of the financial year 2019-20 (FY20). In the same quarter in FY19, the bank had reported a net profit of Rs 1,036 crore. On a consolidated basis, the bank has reported a net profit of Rs 1,433 crore, thereby registering a 38.3 per cent growth year-on-year (y-o-y). This is the lender’s first quarterly result after microfinance lender Bharat Financial Inclusion (BFIL) merged with it.

The net interest income (NII) on a standalone basis stood at Rs 2,419 crore in Q1FY20 as opposed to Rs 2,122 crore in the same quarter in FY19, registering a 14 per cent growth. On a consolidated basis, the NII stood at Rs 2,844 crore. The net interest margin (NIM), a measure of profitability of the banks, stood at 4.05 per cent. The NIM in Q1FY19 stood at 3.92 per cent.

The bank saw an increase in its bad debt as net non-performing asset (NPA) in the June quarter was 1.23 per cent as against 0.51 per cent in the preceding financial year. The gross NPA was 2.15 per cent in Q1FY20 as opposed to 1.15 per cent in Q1FY19. The total advances of the bank registered a 26 per cent growth with total loans amounting to Rs 1.89 trillion in Q1FY20 as opposed to Rs 1.5 trillion in Q1FY19.

Interestingly, although the auto sector is going through a slowdown, the vehicle loans portfolio of the bank has shown an impressive growth of 28 per cent in the quarter with total loans outstanding at Rs 55,046 crore. The bank has made provisions to the tune of Rs 431 crore in Q1FY20. 

On DHFL, Romesh Sobti, managing director & CEO of IndusInd bank, said, “IndusInd Bank’s exposure to accounts, which were speculated as being stressed, was 1.9 per cent and that book has fallen to 1.67 per cent. So, there have been further repayments. Also we have very strong security on these assets and we don’t have any overdues. And, all the accounts are standard.”

On whether the bank is still lending to the stressed NBFC sector, Sobti said, “We have not downed the shutters at all. It’s a question of your becoming more sensitive to who is strong in the sector and I think it’s the strong ones in both NBFC and real estate sector are getting finance from banks.”

The overall capital adequacy increased to 14.90 per cent as against 14.16 per cent in March, courtesy the inclusion of Bharat Financial’s base.

IndusInd Bank closed 1.98 per cent lower at Rs 1,510.35 on the BSE on Friday. The bank said there are only 48 accounts in the SMA1 and SMA2 category and while 0.18 per cent of the bank loans are under SMA 1, 0.17 per cent are under SMA 2. SMA1 accounts are those where principal or interest payment is not overdue for a period of more than 30 days and SMA 2 are accounts whose principal or interest is overdue between 31 and 60 days.