IndusInd Bank posts 99% jump in June quarter profit as provision falls2 min read . Updated: 27 Jul 2021, 07:21 PM IST
- Its total provisions stood at Rs1,844 crore in the three months to June, down 18% from the same period last year
Private sector lender IndusInd Bank on Tuesday reported a near doubling of its June quarter net profit to ₹1,016 crore on a year-on-year (y-o-y) basis on the back of lower provisions.
The bank was estimated to post a profit of ₹802 crore in Q1 FY22, according to an average of estimates by seven analysts polled by Bloomberg.
Its total provisions stood at ₹1,844 crore in the three months to June, down 18% from the same period last year. The lender also reported a net interest income (NII) – difference between interest earned and expended – of ₹3,564 crore in Q1 FY22, up 8% y-o-y. Its net interest margin, a key measure of profitability, was however down on a y-o-y as well as on a sequential basis to 4.06%.
“During the quarter, we focussed on health and safety of our employees. We conducted vaccination drives and over 40,000 or 70% of the employees and our micro finance institution subsidiaries have received at least one dose," said Sumant Kathpalia, chief executive, IndusInd Bank.
The bank reported a 6% y-o-y growth in overall advances at ₹2.1 trillion as on 30 June. Its deposit base saw a 26% y-o-y growth to ₹2.67 trillion in the same period.
“Our domains had begun growth journey in Q4 but that got interrupted due to the second wave. We have already seen uptick in disbursements in vehicle and microfinance from June," said Kathpalia.
Deposit mobilization, Kathpalia said, continues at pace and growth was entirely driven by retail deposits. “Our cost of deposits at 4.97% has fallen below 5% for the first time in our history," he said, adding that the bank expects further contraction in cost of deposits.
According to him, collections have gained momentum since June after a temporary blip in May due to the lockdown. Overall collections for June were at 96% and has further improved in the last few weeks with the recovery in activity levels.
The bank witnessed a deterioration in asset quality as compared to the March quarter. Its gross bad loans stood at 2.88% of its total advances, up 21 basis points (bps) since 31 March.
“In April and May, there was full closure and recoveries were not happening. In June, the trucks started moving and we were able to contact clients. That is where the recovery started happening," he explained.
IndusInd Bank shares on BSE closed at ₹975.65 on Tuesday, down 0.58% from its previous close.
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