Private sector lender IndusInd Bank reported a 62 per cent drop in net profit in the fourth quarter of 2018-19, largely due to its exposure to ailing Infrastructure Leasing and Finance Services (IL&FS), for which it made a provision of ₹1,274 crore in the quarter.

The bank’s net profit fell 62.2 per cent to ₹360.10 crore in the January to March 2019 quarter, against a net profit of ₹953.09 crore in the same period a year ago.

“In 2018-19, as well as the fourth quarter, while the bank has witnessed robust growth in its topline as well as in operating profits, aggressive one-time provisioning for a group exposure in the infrastructure sector depressed the bottomline,” said Romesh Sobti, Managing Director and CEO, IndusInd Bank. The lender has classified advances of ₹3,004 crore to the IL&FS Group, including ₹2,000 crore to IL&FS and ₹1,004 crore to operating companies and SPVs, as ‘non-performing’. An accelerated provision has been made, taking the provision against holding company exposure to 70 per cent and operating companies/SPVs to 25 per cent. The contingent provisions made as a prudential measure, at ₹275 crore during the second quarter and ₹255 crore in the third quarter, have been adjusted. In 2018-19, the lender made a total provision of ₹1,803 crore towards IL&FS.

Its gross non-performing assets also rose up to ₹3,947.41 crore, or 2.1 per cent of gross assets as on March 31, 2019, against 1.17 per cent a year ago. Its net NPAs also shot up to ₹2,248.28 crore, or 1.21 per cent of net advances as on March 31, 2019, compared to 0.51 per cent on March 31, 2018.

The bank’s total income grew by a robust 28.8 per cent to ₹7,550.43 crore in the fourth quarter of 2018-19 from ₹5,858.62 crore a year ago. Net interest income for the reporting quarter grew 11 per cent to ₹2,232 crore, against ₹2,008 crore in the corresponding quarter of the previous year. Net interest margin fell to 3.95 per cent in the fourth quarter. Non-interest income for the quarter grew 29 per cent to ₹1,559 crore.

BFIL merger

Sobti also expressed confidence that the proposed merger of Bharat Financial Inclusion (BFIL) with the bank is completely on track and that the order from the National Company Law Tribunal is likely after the vacation.

“The petition filed with the NCLT to sanction the scheme (merger) was heard on April 23, and the matter was reserved by the NCLT for final order,” the bank said.

Meanwhile, after its agreement for acquisition of IL&FS Securities Services was terminated, IndusInd Bank has made a re-bid for the company, said Sobti, adding that they have not heard anything from IL&FS on the matter.

Sobti also stressed the bank has been working on a succession plan roadmap for the last four years and has been grooming candidates. While he indicated his willingness to continue his association with the bank, he said it would be up to the RBI to review the age norms.

 

 

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