NEW DELHI: Private sector lender IndusInd Bank on Friday reported a 38.3% jump in net profit at ₹1,432.50 crore for the June quarter on account of lower-than-expected provisioning and growth in core interest income. The bank had posted net profit of ₹1,035.72 crore in the corresponding period of the previous fiscal year.
The lender’s gross non-performing assets (NPAs) rose 2.15% of the total advances at the end of June 2019, as against 1.15% in the year earlier. Likewise, net NPAs, or bad loans, too, jumped from 0.51% in the year ago period to 1.23%.
A rise in NPA ratio led to higher provisioning and contingencies at ₹430.62 crore for April-June, as compared to ₹350 crore set aside during the year-ago period.
The management said enough provisions have been made for its exposure to Infrastructure Leasing and Financial Services Ltd (IL&FS), and they expect special purpose vehicle bids to be opened shortly, which will help them recover outstanding dues. The bank had classified ₹3,004 crore of exposure to IL&FS as NPA during the last quarter, and provided ₹1,273 crore against this exposure which led to a 62% fall in net profit.
On the operating side, the lender’s net interest income rose from ₹2,122 crore to ₹2,844 crore year-on-year (y-o-y). Total income grew to ₹8,624 crore in the June quarter of 2019-20, as against ₹6,369 crore in the first quarter of 2018-19.
The bank reported credit growth of 28% y-o-y and deposit growth of 26% as on June 2019. “We expect credit growth to be around mid 20% for the current fiscal year. Net interest margins of the consolidated entity stood at 4.05% in the first quarter and we expect an improvement in margins by 10-15 basis points in the next 2-3 quarters due to fall in cost of deposits," said Romesh Sobti, chief executive officer and managing director of Indusind Bank, in a statement.
The bank’s results for the first quarter include the operating performance of former microfinance lender, Bharat Financial Inclusion Ltd (BFIL), which was merged with IndusInd Bank. It expects to convert 7.5 million customers of BFIL into savings bank customers this fiscal year. The microfinance book, however, reported flat quarter-on-quarter growth even as assets under management grew by 26%.
“We took a conscious decision to tighten the lending norms in a few states because we think there is some overheating in few states like West Bengal and Orissa, “ said MR Rao, CEO, BFIL.