Net interest margin (NIM) at the bank was down 3 bps from the previous quarter to 3.63%. NIMs were supported by a 30% rise in net interest income to R833.11 crore.
Non-interest income grew 34% y-o-y to R558.27 crore on the back of higher distribution fees. Distribution fees came from mutual funds and credit cards. The mutual fund industry has shown a robust turnaround and has fuelled a 13% q-o-q growth, said Romesh Sobti, CEO and MD, Indusind Bank.
Operating profit increased 23.26% y-o-y to R724.67 crore. IndusInd Bank continued to show improvement in asset quality and the gross non-performing asset (NPA) ratio reduced by 3 bps to 1.08% of gross advances. In absolute terms, gross NPAs stood at R654.54 crore.
Net NPAs remained unchanged at 0.33% of net advances from the preceding quarter. As a consequence, the lender made lower provisions for bad loans at
R73.20 crore compared to R110.40 crore in the preceding quarter. Sobti added that R16 crore worth of loans from the vehicle financing portfolio were sold to asset reconstruction companies (ARCs).
Total advances at the end of the quarter stood at R59,931 crore, a growth of 22% y-o-y.
Sobti said the auto and commercial vehicles sector was showing an upward trend, but this is yet to translate into disbursements on the ground. In September, we saw an increase in disbursements and a net accretion of our book. Our vehicle finance book had been stagnant for about 12 months, but saw an increase in September, an upturn fuelled by SIAM data, said Sobti. Total deposits were at R65,996 crore, up 24% y-o-y and the current and savings accounts (Casa) ratio stood at 33.89%.
We dont need to raise funds at the moment
Ramesh Sobti, managing director and chief executive officer, IndusInd Bank, spoke to the media after announcing the results for the second quarter of FY15:
How did IndusInd Bank manage a credit growth of 22% when the rest of the industry is struggling with low credit demand
I wont say there is a pick-up in the working capital demand, but in some of the sectors where we have presence, we are seeing normal demand. The corporate portfolio, because of the wider coverage, is getting new customers and we are building on our existing relationships to get a slightly better market share.
We have seen a good increase in our non-vehicle retail book. We have launched all products whether it is loan against property or car loans or personal loans.
Our loan against property portfolio last quarter was 5% of the book.
Your non-interest income has increased 34% y-o-y...
One segment that has grown robustly in this quarter is our distribution fees, which came in mostly from MFs. The turnaround in the mutual fund industry has been pretty robust and has fuelled the 13% q-o-q growth on this income line.
Do you have any fundraising plans
We do not require to raise funds since we are in a very sound position financially. As for infrastructure bonds, we are still assessing the market. Our entitlement for infrastructure bonds is very small; so, we do not want to be the ones to test the waters.
A stronger dollar has seen RBI express concern that not enough companies are hedging their forex exposures...
We were one of the first banks to disclose our position on this. Guidelines regarding hedging of positions are here to stay. We provided R20 crore in Q1 and that sufficed for the second quarter as well.