IndusInd Bank net profit down 64% to Rs 510 crore on higher provisions

By: |
July 29, 2020 2:45 AM

The net interest income (NII) for the quarter rose 16.4% y-o-y to Rs 3,309 crore. The bank’s net interest margin (NIM) stood at 4.28%, which was up by 3 bps compared with 4.25% in the previous quarter.

The bank’s board on Tuesday also approved a proposal to raise Rs 3,288 crore through preferential issue.The bank’s board on Tuesday also approved a proposal to raise Rs 3,288 crore through preferential issue.

Private lender IndusInd Bank’s consolidated net profit plunged 64.37% year-on-year (y-o-y) to Rs 510 crore in the June quarter on higher provisions. Total provisions increased 425% y-o-y to Rs 2,259 crore, compared to `431 crore in the same quarter last year. As per a stress test conducted by the lender, the slippages are likely to increase 92 basis points (bps) as a consequence of Covid-19. The pre-provision operating profit (PPOP) of the bank stood at Rs 2,928 crore for the quarter ended June 2020, up 13% y-o-y.

The bank’s board on Tuesday also approved a proposal to raise Rs 3,288 crore through preferential issue. The bank has seen a sharp reduction in the number of customers opting for moratorium. Total book under moratorium has come down to 16%, compared to 50% earlier.

Sumant Kathpalia, chief executive officer (CEO), IndusInd Bank, said the bank had changed its policy of ‘opt out’ to ‘opt in’ in the second phase of moratorium. This means a customer has to apply for a moratorium, rather than moratorium being available automatically to borrowers. The bank has also done a stress test to asses Covid-19 situation. The stress test showed that the bank needed `1,336 crore in provisions due to Covid-19. “We have already provided `1,206 crore, out of `1,336 crore,” Kathpalia said.

The net interest income (NII) for the quarter rose 16.4% y-o-y to Rs 3,309 crore. The bank’s net interest margin (NIM) stood at 4.28%, which was up by 3 bps compared with 4.25% in the previous quarter.

The bank’s fee income stood at Rs 1,520 crore for the quarter ended June 30, down 8% y-o-y, as against Rs 1,663 crore for the corresponding quarter of previous year.

The gross non-performing assets (GNPA) increased 8 bps sequentially to 2.53%. The net NPAs, however, came down 5 bps quarter-on-quarter (q-o-q) to 0.86%.

Total deposits as of June 30, 2020 were Rs 2,11,265 crore, as against Rs 2,00,586 crore, an increase of 5% over June 30, 2019. The current account savings account (CASA) stood at Rs 84,473 crore, with current account deposits at Rs 31,946 crore and saving account deposits at Rs 52,527 crore. CASA deposits comprised of 40% of total deposits as of June 30, 2020. Total advances in the June quarter grew 2.4% y-o-y to Rs 1,98,069 crore, as against Rs 1,93,520 crore in June 30, 2019.

IndusInd Bank’s board on Tuesday also approved a proposal to raise Rs 3,288 crore through a preferential issue at a price of Rs 524 per share. The investors in the issue include ICICI Prudential Life Insurance, Tata Investment Corporation, Hinduja Capital, among others. The bank has called extraordinary general meeting (EGM) of shareholders to consider the preferential issue on August 25.

Kathpalia said that the bank had sufficient liquidity and the capital would be useful when the economy picked up in the later half of the year. The capital adequacy of the bank will improve to 16.5% after the issue from 15.16% currently, the bank said.

“The bank will use this capital to continue to invest in liabilities and asset franchise, technology and infrastructure platforms, to expand reach, product offerings and to improve customer experience whilst ensuring sustainable financial parameters,” IndusInd Bank said.

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