IndusInd Bank Ltd today announced a 61 per cent on year rise in its net profit for the quarter to ₹1,631 crore, aided by a fall in provisions and strong disbursements. However, asset quality of the bank deteriorated sequentially, owing to high retail slippages.

Total advances of the private sector lender were higher by 18 per cent on year at ₹1,631 crore as of June 30. Microfinance loans grew 13 per cent to ₹29,403 crore as on June 30, comprising 12 per cent of the bank’s loan book. However, the loans were 4 per cent lower sequentially.

Net Interest Income of lender rose by 16 per cent on year to ₹4,125 crore, leading to the NIM improving to 4.21 per cent from 4.06 per cent in the year ago period.

Provisions of the bank fell 30% on year and 14% on quarter to Rs 1,251 crore. The provision coverage ratio was at 72% as of June 30.

Credit growth

In the post earnings conference, MD and CEO, Sumant Kathpalia said, he expects credit growth for the current financial year to be around 20 per cent, as the bank also makes up for the muted 12 per cent growth seen in FY22, adding that micro-finance, credit cards and corporate loans remain key focus areas for the bank.

The on-quarter de-growth in the micro-finance segment was because the bank took 40-45 days to shift to the new regulatory norms, leading to lower disbursements during the period, he said, adding that he expects growth to revive to the earlier levels of 25-30 per cent growth, given the strong demand.

Kathpalia also sees strong growth in the bank’s diamond finance book, aided by stablilisation in the domestic currency and opening up of COVID-related restrictions in China and Hong Kong. Diamond loans grew 28 per cent on year but only 1 per cent sequentially for the reporting quarter, with Kathpalia pegging growth for the segment at 12 per cent for FY23.

The bank also plans to roll out mortgage and home loans in the current quarter, he added.

Asset Quality

IndusInd Bank’s asset quality deteriorated on quarter owing to fresh slippages of ₹2,250 crore of which ₹1,647 crore were from the consumer loans segment.

Gross NPA (Non-performing Assets) ratio of the bank stood at 2.35 per cent as of June 30, worse than 2.27 per cent a quarter ago, but better than 2.88 per cent a year ago. The net NPA ratio at 0.67 per cent too was slightly worse than 0.64 per cent in the previous quarter but improved from 0.84 per cent in the year ago period.

The bank wrote-off loans worth ₹1,20 crore during the quarter, of which one was a media company account and another was a real estate account, Kathpalia said.

He added that the slippages of ₹921 crore from the restructured book were in-line with the bank’s assessment and are expected to stabilise going ahead.

Liabilities Profile

IndusInd Bank’s deposits rose 13 per cent on year to ₹3.0 lakh crore, led by a 16 per cent growth in low-cost current and savings account deposits. CASA deposits account for 43 per cent of total liabilites as of June 30.

Kathpalia said the focus for the bank continues to be on granualisation of liabilities with the aim of increasing the share of CASA deposits to 45 per cent, adding that he also sees “great opportunity” in NRE deposits.

“We are focussed on making sure that we garner as much as NRI deposits during this time because there is a CRR and SLR exemption at this point of time,” he said, adding, while this may lead to a bump in cost of deposits, the bank should be able to manage NIMs within the guided range.

Capital adequacy ratio of the bank was at 18.1 per cent as of June 30, of which tier-I capital was 16.5 per cent.

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