IndusInd Bank Q1 net profit jumps 60.5% YoY to Rs 1,631.1 crore, beats estimate

IndusInd Bank on July 20 reported a 60.5 percent year-on-year rise in net profit at Rs 1,631.1 crore for the quarter ended June, which was above analysts' expectations of Rs 1,423.5 crore.

The net profit rise was helped by a 30 percent year-on-year fall in provisions as well as a 16 percent growth in net interest income. The bank provided Rs 1,250.99 crore towards bad loans during the quarter, far lower than the Rs 1,779.33 crore made in the corresponding quarter a year ago.

The provisioning need came down owing to an improvement in asset quality metrics. IndusInd Bank's gross non-performing assets fell by 4 percent from a year ago to Rs 5,932.90 crore. As a percentage of the lender's total loan book, gross NPAs were 2.35 percent of its loan book for the June quarter, down from 2.88 percent a year ago. On a net basis, NPAs were down to 0.67 percent of the loan book from 0.84 percent a year ago.

That said, the ratios have increased slightly on a sequential basis for the bank. Further, the bank’s fresh slippages have also increased on a sequential basis. Fresh slippages totalled Rs 2,250 crore for the quarter, partly because restructured loans slipped. The restructured pile reduced marginally to 2.1 percent from 2.6 percent in the previous quarter. “You will see the stabilisation of the restructured book,” said Sumant Kathpalia, chief executive officer of the bank said in a media call. What’s more is that the bank’s write-offs remained elevated and upgrades and recoveries dropped sharply. The bank said that it has not sold any bad loans to asset reconstruction companies during the quarter.

The big weakness in the bank’s loan book was from microfinance as 3.38 percent of the portfolio was bad, a sharp jump from 2.45 percent in the previous quarter. While two-wheeler loans had the highest NPA ratio of 7.78 percent, they were down on a sequential basis. The microfinance loan book shrank marginally from the previous quarter. The bank said that growth would soon bounce back to 25-30 percent for this portfolio.

That said, the bank’s overall loan book grew by 18 percent, which was broad-based across loan categories. The bank is also planning to launch home loans in July-September.

The corporate loan book grew by 23.8 percent year-on-year The bank’s stronghold, vehicle finance, delivered decent growth on both a year-on-year as well as a sequential basis. Vehicle finance book grew by 8 percent year-on-year as disbursements more than doubled. “Our vehicle and microfinance had the best quarterly loan growth in history,” said Kathpalia.

The 18 percent loan growth powered the bank’s core interest income growth. Net interest income grew by 16 percent to Rs 4,125 crore while non-interest income showed modest growth of 12 percent to Rs 1,932 crore. A sharp fall in trading income was behind the sobering growth in non-interest income despite a 47 percent jump in fee income.

The bank’s shares ended more than 1 percent up on Wednesday ahead of the release of the quarterly results.