Money & Banking

IndusInd Bank net profit jumps 24% on higher interest income

Our Bureau New Delhi | Updated on July 10, 2018

Romesh Sobti, CEO and MD, IndusInd Bank

Overall asset quality improves; merger with BFIL to be completed in three months

Private sector lender IndusInd Bank, on Tuesday, registered a 23.7 per cent increase in net profit in the first quarter of the fiscal at ₹1,036 crore.

It had registered a net profit of ₹837 crore in the first quarter of 2017-18 and ₹953 crore in the fourth quarter of last fiscal.

Total income grew to ₹6,369.75 crore in the reported quarter, compared to ₹5,302.77 crore in the year-ago period.

The core net interest income rose 20 per cent to ₹2,122 crore with a 29 per cent loan growth, while the non-interest income moved up to ₹1,301 crore from ₹1,167 crore in the year-ago period.

There was a marginal increase in bad loans as gross non-performing assets (NPAs) stood at 1.15 per cent of gross advances as on June 30, 2018, against 1.09 per cent in the same period a year ago. However, it was marginally lower than the 1.17 per cent at the end of the fourth quarter of last fiscal.

In absolute terms, gross NPAs or bad loans stood at ₹ 1,740.62 crore, compared to ₹1,271.68 crore a year ago.

Net NPAs in the first quarter stood unchanged at 0.51 per cent, the same as in the previous quarter. It was, however, marginally higher than the 0.44 per cent in the first quarter of last fiscal.

The bank also made a provision of ₹350.01 crore for the June quarter for bad loans as well as contingencies, against ₹309.97 crore a year ago.

“We have had all-round robust performance with good through put on all three drivers of our growth,” said Romesh Sobti, CEO and MD of the bank, adding that the overall asset quality also improved with NPAs at one of its lowest levels.

Corporate advances increased 30 per cent and retail lending grew 28 per cent in the first quarter. Vehicle loans also grew by over 50 per cent, and Sobti predicted robust growth for the next two years.

The growth in corporate advances was diversified, with insolvency resolution loans, power transmission and renewables being the largest users of credit, he said, adding that the bank is open but cautious to project finance.

Net interest margin was marginally lower at 3.92 per cent in the first quarter of the fiscal from 3.97 per cent in the previous quarter because of repricing of the loan book and rise in cost of deposits.

Sobti said the return on assets for the quarter ended June 30, 2017, improved to 1.91 per cent against 1.86 per cent a year ago.

The bank also made mark-to-market losses of ₹86 crore on account of the hardening of yields of government securities and has made full provision for it.

Merger with BFIL

Sobti further said that the merger with Bharat Financial Inclusion (BFIL) has received most approvals, and should be completed in the next three months. “We will file for approval from the National Company Law Tribunal next week,” he said.

The bank is also working on the acquisition of IL&FS Securities Services and hopes to complete it by the end of the current quarter.

Shares of the bank fell by 1 per cent to close at ₹1,935 apiece on the BSE.

 

 

Published on July 10, 2018

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