IndusInd Bank profit jumps 27% on NII push

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Mumbai | Published: April 20, 2018 5:50:48 AM

However, bad loans surged as the lender disclosed a Rs 1,350-crore divergence in NPAs it reported for FY17

IndusInd Bank, bad loan, NII, IndusInd Bank profit, npa ratio, Insolvency and Bankruptcy Code, diamond industryThe bank sold assets aggregating Rs 473 crore to asset reconstruction companies (ARCs) during the quarter, up from Rs 450 crore in the December quarter. (PTI)

Private sector lender IndusInd Bank on Thursday reported a year-on-year net profit growth of 26.8% to Rs 953.09 crore for the quarter ended March 31, 2018, on the back of a 20.4% year-on-year (y-o-y) rise in net interest income (NII) to Rs 2,007.59 crore. NII is the difference between interest earned and interest paid by the bank. Net interest margin (NIM) at 3.97% continued to decline from 3.99% for the quarter ended December 2017 and 4% for the quarter ended March 2017. The bank’s provisions declined 22% to Rs 335.56 crore against the year-ago period.
Asset quality at the bank remained almost unchanged from the previous quarter, with the gross non-performing asset (NPA) ratio rising to 1.17% from 1.16% and the net NPA ratio rising 5 basis points (bps) to 0.51%.

The bank sold assets aggregating Rs 473 crore to asset reconstruction companies (ARCs) during the quarter, up from Rs 450 crore in the December quarter. Credit cost for the quarter was 62 bps and loans in the special mention account-2 (SMA2) category constituted 0.13% of the loan book. The bank has an exposure of Rs 385 crore to the 40 accounts mandated for resolution under the Insolvency and Bankruptcy Code (IBC) by the Reserve Bank of India (RBI). It has made provisions to the extent of 65% against these accounts.

IndusInd Bank reported a divergence of Rs 1,350.2 crore between the regulator’s assessment of non-performing assets (NPAs) at the bank at the end of FY17 and its own. Of this, one account worth Rs 518.52 crore is towards a bridge loan for an M&A transaction in the cement industry, which is standard on the lender’s books. Another account in the roads industry worth Rs 104.2 crore, which remains standard on other consortium members’ books, was classified as NPA by the bank.

The total impact of recognition of divergences on gross NPA was Rs 185.9 crore. Managing director and chief executive officer Romesh Sobti said the bank had exposure to one of the two diamond accounts where an LoU-related fraud was unearthed in February. “We have upfront taken the pain in the account in the diamond industry that has been talked about. There are two and we don’t have one at all. The other one was a legacy account and it is one which we have treated as fraud and provisioned as per RBI norms,” he said.

Total advances as on March 31 stood at Rs 1.45 lakh crore, up 28% from the previous year, while total deposits rose 20% y-o-y to Rs 1.52 lakh crore. The current accounts savings accounts (CASA) ratio improved to 44.01% from 36.85% at the end of March 2017.

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