The private sector lender reported a 62% decline in net profit at ₹360 cr for the quarter ended 31 March, compared with a profit of ₹953 cr a year ago
Provisions rose to ₹1,560 crore in the March quarter from ₹606 crore in the December quarter
Private sector lender IndusInd Bank Ltd on Wednesday reported a 62% fall in fourth quarter net profit, hurt by higher provisions for bad loans. Net profit fell to ₹360 crore for the quarter ended 31 March, compared with ₹953 crore a year earlier.
Provisions for bad loans increased to ₹1,560 crore in the March quarter from ₹606 crore in the December quarter and ₹335 crore in the March quarter of the previous year.
IndusInd Bank classified infra assets worth ₹3,004 crore of the IL&FS group as non-performing assets (NPAs) during the quarter.
The bank made a total provision of ₹1,273 crore against its exposure toward IL&FS with provision towards the holding company at 70% and to operating companies/special purpose vehicles (SPVs) at 25%.
The management is confident of 90-100% recovery from the special purpose vehicles.
“By June the board will announce the results of bids for different special purpose vehicles. We are basing our estimates on the basis of those who had bid. We have some knowledge of those who had bid, who are our clients. It seems that these bids are higher than the total bid of that particular special purpose vehicles together," said Romesh Sobti, managing director and chief executive officer, IndusInd Bank.
Asset quality deteriorated, with both gross as well as net non-performing assets as a percentage of total loans increasing in the March quarter. Gross NPAs as a percentage of total loans increased to 2.1% in March quarter, against 1.13% in the December quarter. Similarly, net NPAs, which take provisioning into account, also increased to 1.21%, from 0.59%.
However, the bank reported a 10% increase in net interest income to ₹2,240 crore in the March quarter. The loan book grew 29% to ₹1.86 trillion and the deposit book 29% to ₹1.94 trillion. Net interest margins for the year ended 31 March 2019 stood at 3.8% compared to 3.99% in the previous period.
IndusInd Bank shares fell over 2% after the results were announced but recovered in afternoon trade.
“IndusInd Bank delivered a poor set of results as the bank opted for lumpy, accelerated provisioning (>50%) on one of its infrastructure conglomerate exposures (amounting to 1.8% of total loan book). The bank also disclosed a vulnerable portfolio stacking up at 1.9% of its loan book, which, to our minds, leaves scope for an upward revision subsequently. We continue to maintain a neutral stance on IndusInd Bank as we are less than totally convinced about the disclosures around rising granularity on both sides of the balance sheet," said A.S.V. Krishnan, vice-president, SBICap Securities.