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Private sector lender IndusInd Bank posted a subdued 4.6 per cent increase in net profit at ₹920.25 crore for the second quarter of the fiscal due to a one-off prudential contingency provision of ₹275 crore on exposure towards troubled Infrastructure Leasing and Financial Services group.
“This is a precautionary measure which can be clawed back, and is based on a worst-case scenario judgement. We hope the resolution plan comes by the end of the month,” said Romesh Sobti, Managing Director and CEO, IndusInd Bank, after announcing the second quarter results of the lender on Monday.
“Advances granted to various companies belonging to a group in the infrastructure sector...are classified as standard,” the lender said in a statement.
While declining to give the exact exposure to IL&FS and group firms, Sobti said it is in the nature of loans, including one to a special purpose vehicle, which is AAA-rated, and is expected to be among the first to be sold off.
The bank’s management is monitoring the developments and implications of the resolution plan.
In the normal course of business, without making the provision, IndusInd Bank would have registered a 25 per cent increase in net profit, said Sobti.
The bank had registered a net profit of ₹880.10 crore in the quarter ended September 30, 2017.
Net profit for the half year ended September 30 grew 14 per cent to ₹1,956 crore against ₹1,717 crore a year ago.
Total income of the bank rose to ₹6,755 crore during the September quarter, from ₹5,395 crore in the same period in 2017-18.
The net interest income of the lender grew 21 per cent to ₹2,203 crore in the July to September quarter of this fiscal, compared to ₹1,821 crore a year ago. Other income grew 10.9 per cent to ₹ 1,317.28 crore in the quarter under review from ₹1,187.57 crore a year ago.
Gross non-performing assets (NPA) of the bank rose marginally to 1.09 per cent during the quarter from 1.08 per cent in the same period last year. Net non-performing assets rose slightly to 0.48 per cent in the second quarter from 0.44 per cent a year ago.
Provisioning by the bank rose to ₹590.27 crore during the quarter from ₹293.75 crore in the year-ago period.
Acquisition of ISSL
Sobti also expressed confidence that the acquisition of IL&FS Securities Services (ISSL) is on track despite the recent developments around the holding company and its subsidiaries.
“We have engaged with the new management. There is willingness and determination on both sides to conclude the transaction,” said Sobti, adding that all regulatory approvals came before the end of September.
“It will happen sooner than later,” he stressed. IndusInd Bank had, earlier this year, announced it would buy a 100 per cent stake in IL&FS’s brokerage business, ISSL. Meanwhile, Sobti also said the merger of Bharat Financial Inclusion is likely to be completed soon. An application was made to the National Company Law Tribunal seeking directions to hold a meeting of shareholders and creditors.
IndusInd Bank shares fell 1.48 per cent on the BSE and closed at ₹1,626.85 apiece.
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