IndusInd Bank posted a 40% year-on-year fall in its net profit to Rs 1,325 crore in the second quarter of current financial year, impacted by rise in provisions for bad loans. The private lender’s bottomline missed expectations as analysts polled by Bloomberg had estimated the bank to post Rs 2,214 crore net profit in the quarter.
Net interest income, the difference between interest earned and paid, rose 5% to Rs 5,347 crore in the second quarter from Rs 5,077 crore in the same quarter of previous fiscal.
The bank’s net interest margin (NIM) declined to 4.08% from 4.29% in the year-ago period, mainly because of the stress in microfinance loans.
The bank set aside more provisions as a prudent measure, said Sumant Kathpalia, MD & CEO, IndusInd Bank in an earnings call. “In the next few quarters, if microfinance book comes back, we should see NIMs back at original levels of 4.2-4.3%,” said Kathpalia.
The bank’s total advances rose 13% year-on-year to Rs 3.57 lakh crore. Unsecured retail loans declined 6% quarter-on-quarter and microfinance loans fell 5% to Rs 32,723 crore.
Its slippages, or the proportion of standard loans turning bad, rose 17% from the previous quarter to Rs 1,798 crore.
“IndusInd Bank aligned its strategy focusing on ramping up retail deposit mobilisation, maintaining traction on secured loans, de-growing unsecured loans and building conservative buffers on provisions,” said Kathpalia. “The outcomes for Q2 were evident in deposit growth of 15% y-o-y ahead of loan growth of 13% y-o-y,” he said.
Deposits as of September 30, 2024 were Rs 4.12 lakh crore, an increase of 15% over last year. CASA deposits comprised 35.87% of total deposits as of September 30, compared with 37% in June. Retail deposits stood at Rs 1.81 lakh crore as of September 30, up by 16% year-on-year.
The bank’s provisions and contingencies for the quarter rose 73% quarter-on-quarter to Rs 1,820 crore and 87% year-on-year.
Its gross non-performing asset (GNPA) ratio increased 9 basis points year-on-year to 2.11%, while the net NPA ratio expanded 7 basis points to 0.64%.
The total capital adequacy ratio as per Basel III guidelines stood at 16.51% as on September 30, 2024, as compared to 18.21% as on September 30, 2023. The provision coverage ratio was at 70% as at September 30, 2024.