IndusInd Bank’s quarterly net profit crossed the ₹2,000 crore mark for the first time in Q4, with the private sector lender posting a profit after tax of Rs 2,043 crore, higher by 46 per cent YoY and 4 per cent QoQ. The consolidated results include the earnings of wholly-owned subsidiary Bharat Financial.

Net interest income (NII) grew 17 per cent YoY to ₹4,669 crore. The NIM for the quarter was 4.3 per cent, flat from the previous quarter and slightly higher than 4.2 per cent a year ago. NII for FY23 was Rs 17,592 crore, up 17 per cent from the previous year. Net profit for FY23 was ₹7,443 crore, up 55 per cent on year.

Advances as of March 31, 2023 were ₹2.9 lakh crore, an increase of 21 per cent YoY.

In the earnings meet, MD and CEO Sumant Kathpalia said that all three business verticals of the bank are showing strong growth, but disbursements in vehicle finance were slightly lower sequentially owing to the strong base in the previous quarter led by festival-led consumption.

While unsecured retail loans have been a strong growth segment for the banking sector, Kathpalia said that the bank was being “optimistically cautious” and going slower because it also has a large microfinance portfolio.

Consumer unsecured loans currently constitute 4.8 per cent of the bank’s portfolio and will continue to be below 5 per cent, he said, adding that the MFI book constitutes 12 to 13 per cent. He pegged loan growth for FY24 at 18–23 per cent.

Deposits grew 15 per cent YoY to ₹3.4 lakh crore, led by 19 per cent growth in retail deposits. CASA deposits increased to ₹1.3 lakh crore, accounting for 40 per cent. Kathpalia pegged retail deposit growth at 22-23 per cent for FY24.

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He said that the focus will remain on granularisation of deposits and not bulk deposits which comprise 28 per cent of total deposits, adding that the bank wants the share of retail liabilities in deposit growth to increase to 85 per cent from the current 73 per cent.

Gross NPA

The gross NPA ratio improved to 2.0 per cent from 2.1 per cent a quarter ago and 2.3 per cent a year ago, whereas the net NPA was unchanged at 0.6 per cent, both quarterly and yearly.

A bulk of the MFI slippages are from the restructure book or from the eastern part of the country, which turned NPA. However, the 30 days-past-due book has declined to 1.2 per cent of the portfolio, and with the bank recognising whatever NPAs it had, the MFI book is expected to “clean” going ahead, he said, adding that net slippages will remain in the range of 90–120 bps.

Going forward, IndusInd Bank will look to convert its microfinance book into a microbanking unit and increase its penetration in affordable housing and home improvement loans, including building a mortgage portfolio as a core competency. The bank also plans to grow the MSME book to constitute over 25 per cent of loans from 10 per cent at present.

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