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Private sector lender IndusInd Bank posted a 5.2 per cent increase in net profits for the third quarter of the fiscal on high provisions due to exposure to debt-laden IL&FS.
Beating expectations, the bank’s net profits rose to ₹985.03 crore for the quarter ended December 31, 2018, compared to ₹936.25 crore in the same period a year ago.
Its total income grew by 32.13 per cent to ₹7,232.32 crore in the October to December 2018 quarter, against ₹5,473.54 crore a year ago.
Net interest income of the bank also grew by 21 per cent to ₹2,288 crore in the third quarter of this fiscal, compared to ₹1,895 crore in the third quarter of 2017-18.
Fee income also rose by a robust 24 per cent to ₹1,469 crore from ₹1,187 crore a year ago. However, it was high provisions, at ₹606.68 crore in the third quarter of the fiscal, which dented the lender’s profitability. This was a 156.89 per cent increase compared to provisions of ₹236.16 crore a year ago.
This was largely due to a ₹255-crore provision for loans to IL&FS in the third quarter of this fiscal. IndusInd Bank had similarly made a contingent provision of ₹275 crore, along with a floating provision of ₹70 crore in the second quarter of the fiscal.
“The total provision for IL&FS is now at ₹600 crore. If required, we will make further provision in the fourth quarter. The resolution plan, in final form, is still to come, but we believe there are enough assets,” said Romesh Sobti, Managing Director and CEO, IndusInd Bank, underlining that the bank has had a strong quarter-on-quarter growth.
“Advances granted to various companies and SPVs belonging to a group in the infrastructure sector against certain identified cash flows and pertaining to specific assets are classified as ‘standard’ as of December 31, 2018,” the lender said in a regulatory filing, adding that it is closely monitoring the developments and implications of the resolution plan.
Gross non-performing assets (NPAs) of the lender declined to 1.13 per cent of the total advances during the third quarter of the current fiscal, against 1.16 per cent at the end of third quarter. However, net NPAs of the bank rose to 0.59 per cent in the quarter from 0.46 per cent of the total assets.
IndusInd Bank shares gained 1.47 per cent on Wednesday and closed at ₹1,600.80 apiece on the BSE.
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