IndusInd Bank’s Q2 net rises 45% on fee income growth

IndusInd Bank’s Q2 net rises 45% on fee income growth

Mumbai: IndusInd Bank Ltd’s second-quarter net profit rose 45%, beating analyst expectations, as the lender earned more interest and fee income.

Net interest income, or interest earned from loans minus that paid on deposits, increased 27% to 419.19 crore from 329.73 crore. Fee income increased 30% to 211.87 crore from 163.14 crore, helped in part by an agreement to offer customers home loans from Housing Development Finance Corp. Ltd (HDFC).

“We are earning 3 crore to 4 crore fees per month from businesses like trade and remittance services, distribution of insurance and mutual funds and for selling home loans from HDFC and loans against property," managing director and chief executive officer Romesh Sobti said.

IndusInd Bank earns a fee per home loan sold. HDFC handles the processing, disbursement and servicing of loans.

Although the bank expects loan growth of 25-30%, higher than the industry’s expected growth rate of 18%, for the rest of fiscal 2012, margins will be under pressure due to rising interest rates, Sobti said.

“The third and fourth quarters will see some pressure on margins, but I do not expect either a big gain or loss for my bank in terms of margins," he said.

IndusInd Bank’s net interest margin (NIM), a measure of the difference between the interest rate charged for loans and that paid for deposits, dropped 6 basis points to 3.35% in the September quarter from a year earlier because of the increased cost of funds. One basis point is one-hundredth of a percentage point.

Shares of IndusInd Bank closed at 267.4 apiece on BSE, down 0.93%, on a day the bourse’s benchmark Sensex fell 1.63% to close at 16,748.29 points.