ING Vysya Q4 net up 40% on loan demand

Mumbai: ING Vysya Bank Ltd on Tuesday said its net profit rose 40% to Rs 127.39 crore in the January-March quarter on demand for loans from both large and small companies and mortgages from individuals.

The bank’s net profit was higher than the Bloomberg estimate of Rs 120.16 crore.

Its net interest margin (NIM) remained static at 3.29% as the higher cost of funds ate into the better yield on advances that the bank managed from its borrowers.

NIM is the difference between interest earned and interest expended and a key matrix in a bank’s profitability.

ING Vysya paid an average of 6.99% for deposits in the quarter, up from 5.25% last year, and the yield on advances improved from 10% to 11.53%.

Jayant Mehrotra, chief financial officer at ING Vysya, said demand for working capital loans from large companies and small and medium enterprises (SMEs) and for mortgage loans from individuals formed the “growth engine” for the bank in the quarter.

“Our relationship with ING allows us to attract a lot of demand from blue-chip companies. Large and emerging companies make up 43% of our loans, followed by SMEs at 32% and mortgages at 16.5%,” Mehrotra said.

Dutch banking group ING Groep NV holds a 44% stake in ING Vysya Bank.

ING Vysya chose to increase provisions in the quarter to Rs 56.60 crore from Rs 4.27 crore earlier. This, according to the bank, was “to enhance the provision coverage ratio to 90.7% from 83.4%.”

“We got a one-time benefit from money set aside from tax and we decided it will be used to increase provision and set it aside for a rainy day because we always take a conservative view,” Mehrotra said.

The bank’s net non-performing assets as a percentage of loans fell to 0.18% from 0.39%.

ING Vysya’s results did not provide any surprise, said an analyst with a local brokerage who did not want to be named. “Their results are absolutely in line with our expectations. By increasing the provision, they have demonstrated prudence rather than making a one-time gain. This will prove a buffer for the future and will smoothen earnings,” she said, adding that flat NIM is the only negative this quarter but the bank is likely to bounce back during April-June.

ING Vysya shares ended at Rs 373.90 a piece on BSE on Tuesday, up 2.12%, while the 30-share Sensex index rose 0.65% to 17,207.29 points.

joel.r@livemint.com