IndusInd Bank on Friday reported a 90% year-on-year decline in its December quarter net profit to Rs 127.98 crore. Analysts had expected the bank to book a profit of Rs 272 crore, according to Bloomberg.
Total income stood at Rs 13,080 crore, down 13.7% from the previous year. The bank reported an additional impact of Rs 228.96 crore under ’employees cost’ as a results of the New Labour Code.
Structural Headwinds
The net interest income decreased 13% YoY to Rs 4,562 crore. The net interest margin (NIM) inched up to 3.52%, compared to 3.32% in the previous quarter.
Provisions were up 20% to Rs 2,095 crore from Rs 1,743.63 crore a year ago. The bank expects the impact from the new ECL framework to be 1.3-1.7% of the loan book.
Advances declined 13% YoY to Rs 3.18 lakh crore as on December 31 and deposits fell 4% YoY to Rs 3.94 lakh crore, driven by reduction in bulk deposits, the bank said.
“Our ambition is to grow in line with market in FY27 and to deliver 1% ROA over the next 12-18 months,” the management said in its post-earnings call.
Micro-Loan Stress
The asset quality marginally improved during the quarter. Gross non-performing asset ratio (GNPA) inched down to 3.56% from 3.60% a quarter ago, while the NNPA ratio remained stable at 1.04%.
“Slippage during Q3 were range bound in all businesses, except micro loans. Slippage in micro loans remained elevated as we had implemented stringent underwriting norms earlier this year. These norms are beginning to show effect as incremental stress formation is reducing consistently. We continue to work towards reduction in outstanding stress book,” the management said.