IndusInd Bank, India’s fifth largest private sector bank, reported a net profit of Rs 533 crore for the quarter ended March, as against a net loss of Rs 2,236 crore in the corresponding period a year ago. The bottom line improved on the back of lower provisions and an improvement in asset quality. Analysts had pegged the net profit for lender at Rs 211 crore, according to data compiled by Bloomberg.
Rebounding Profitability
“We have been guiding that 2026-2027 is when we transition to a growth mindset, and we believe that this year should be when we start to grow broadly in line with markets, both on assets as well as on liabilities,” Rajiv Anand, managing director and CEO of the bank said in the post earnings media call.
The net interest income (NII) of the bank grew 43.4% on year to Rs 4,371 crore for the reporting quarter, missing analyst expectations of Rs 4,453 crore. On a sequential basis however, the NII declined by 4.2%. Other income for the reporting quarter grew by 140.7% on year to Rs 1,706 crore in Jan-Mar. The net interest margins of the bank stood at 3.39% in the reporting quarter as against 3.52% a quarter ago.
The loan book was down 8% on year to Rs 3.15 lakh crore and deposits too declined by 3% on year to Rs 3.99 lakh crore. Within the overall loan book, the retail book fell 4% on year to Rs 1.63 lakh crore, with the rural banking segment falling 29% on year. The small and medium enterprise book (SME) and the wholesale book too declined by 5% and 16% on a year-on-year basis. The bank has also decided to scale up the micro loan book going forward. As on March 31, the micro loan book stood at Rs 16,782 crore.
Operational De-growth
“As far as margins are concerned, the intent is clearly to improve them going forward,” Anand said. He said that over the last two to three quarters, the microfinance business has de-grown, though disbursals are now matching repayments. “As microfinance returns to growth and other segments such as affordable housing and gold loans expand, we expect to see an improvement in margins — not immediately, but over the medium term,” he added.
Within deposits, the current account and savings account (CASA) deposits stood at Rs 1.24 lakh crore with current account deposits at Rs 35,034 crore and savings account deposits at Rs 89,899 crore. CASA deposits comprised 31.24% of total deposits as at March 31. Retail deposits stood at Rs 1.83 crore as at March 31 as against Rs 1,87 crore a year ago. The cost of deposits moderated to 6.07% in Jan-Mar from 6.09% a quarter ago.
The provisions and contingencies declined nearly 39% on year to Rs 1484.34 crore during the reporting quarter. The provision coverage ratio stood at 71% as on March-end. The gross non-performing asset ratio stood at 3.43% as on March 31 as against 3.56% a quarter ago. Net NPA ratio too improved to 1.00% from 1.04% a quarter ago. Gross slippages for the reporting quarter moderated to Rs 1,825 crore from Rs 2,560 crore a quarter ago.
Regarding the West Asia crisis, Anand said that they are not seeing any significant impact on the book as of now, but would continue to engage with their customers. “If the crisis continues, particularly from the perspective of getting physical oil and gas, you know, to industries like, you know, ceramics or fertilisers, we could have some impact on specific industries. But we will have to, wait and watch as the situation evolves,” he said.
The capital adequacy ratio stood of the bank stood at 17.48%, with the common equity tier-I ratio at 16.20%. The liquidity coverage ratio stood at 118%.
In a move to strengthen the senior management, the bank has proposed the appointment of Ganesh Sankaran, Head Wholesale Banking and Jagdeep Mallareddy, Head- Consumer Banking as Executive Directors (designate) on the board, subject to RBI and shareholder approvals. Additionally, Sunil Kumar Singh will be the chief compliance officer.
The bank has recommended a final dividend of Rs 1.50 per equity share (15%) for the financial year ended March 31, subject to shareholder approval. On Friday, the shares of IndusInd Bank closed 1.4% lower at Rs 850 on NSE.