IndusInd Bank Ltd kicked off the results season for banks, reporting a hefty 52% rise in net profit for the June quarter compared with the year-ago period. Net interest income was up 32%, core fee income rose 44% and operating profit was higher by 35% year-on-year (y-o-y). That’s strong growth, of course, but not as strong as it used to be.

For comparison’s sake, for the March quarter, net profit was up 75%, operating profit rose 49%, net interest income grew 42% and core fee income was higher by 47% y-o-y. But then, as the bank grows, it would be unreasonable to expect it to double profits every year.

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Net interest margins (NIMs) came in lower compared with the March quarter, but that would hold true for the banking sector as a whole, given the pressure on repricing of deposits and higher interest for savings bank accounts. In fact, IndusInd Bank’s NIMs have increased only a bit, because it has a lot of working capital loans, which can be re-priced swiftly. Bad loans, too, increased a bit, but that’s partly due to the credit card business acquired from Deutsche Bank AG. Net non-performing assets are still a very low 0.3%.

The bank’s loan growth has been 31% y-o-y, slightly above the 30% target it has set for itself and its credit-deposit ratio is a high 80%, which means the deposits are being used efficiently. The improvement in the bank’s low-cost current and savings account deposits (Casa) continues, with Casa at 28.2% compared with 27.2% during the March quarter.

The bank management says that fee growth will exceed loan growth; fee income growth has been good so far, especially the income from insurance distribution. The bank has an agreement with Housing Development Finance Corp. Ltd to originate mortgages for them, for which the latter receives a commission.

Among new initiatives, IndusInd Bank has taken over Deutsche Bank’s credit card business and now has a 100 crore portfolio of loans against property. It has also started loans for purchasing second-hand commercial vehicles.

The IndusInd Bank stock has beaten the Bankex of the Bombay Stock Exchange (BSE), as the chart shows and, given the management’s track record, there’s no reason why it won’t continue to do so.

Graphic by Naveen Kumar Saini/Mint