Q3 Performance: IndusInd Bank net rises 5% on IL&FS exposure

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Mumbai | Published: January 10, 2019 4:27:30 AM

Private sector lender IndusInd Bank on Wednesday posted a 5.2% increase in net profit to Rs 985.03 crore for the third quarter ended December 31, 2018.

IndusInd Bank, IndusInd Bank Q3 Performance, IL&FS exposureThe private sector lender has a total exposure of Rs 3,000 crore to IL&FS of which Rs 2,000 crore exposure is from IL&FS Holding company.

Private sector lender IndusInd Bank on Wednesday posted a 5.2% increase in net profit to Rs 985.03 crore for the third quarter ended December 31, 2018. The marginal increase in profits can be attributed to a higher contingency provision made by the bank on account of its exposure to IL&FS. The bank had recorded a net profit of Rs 936.25 crore in the corresponding quarter a year earlier.

It has made provisions of Rs 255 crore in Q3 in addition to Rs 275 crore provision made in Q2FY19, taking the total provisions made against the IL&FS exposure to Rs 600 crore. The private sector lender has a total exposure of Rs 3,000 crore to IL&FS of which Rs 2,000 crore exposure is from IL&FS Holding company.

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Provisions and contingencies surged 157% year-on-year to Rs 606.68 crore in the quarter from Rs 236.16 crore, while it rose 2.78% quarter-on-quarter from Rs 590.27 crore. Asset quality at the bank marginally improved year-on-year, with the gross non-performing asset (NPA) ratio falling to 1.13% from 1.16% and the net NPA ratio rising 13 basis points (bps) to 0.59%. On a quarter-on-quarter basis, the gross NPA ratio rose by 4 bps and net NPA rose by 11 bps. The total gross NPA’s for the quarter amounted to Rs 1,968.15 crore.

Managing director and CEO Romesh Sobti said the bank has maintained the IL&FS account as ‘standard’ while it is way ahead in its provisioning against the infrastructure lender. “Provisions were made as according to a non-standard account and will provide more in the fourth quarter after assessing asset valuations,” said Sobti after announcement of the bank’s third-quarter results.

Since October 1, certain governance and management changes have taken place in IL&FS group and measures to turn it around through a resolution plan are underway. The bank’s management added that it is monitoring the developments and implications of the resolution plan. “Even if the worst case scenario of resolution happens, we still may not take a huge hit in our books as our exposure is against very specific cash flows,” Sobti added.

Net interest income (NII) — the difference between interest earned and interest paid by the bank — grew 21% year-on-year to Rs 2,288 crore, while it rose 4% from the previous quarter. Total advances as on Q3 stood at Rs 1.73 lakh crore, up 35% from the previous year, while total deposits rose 20% y-o-y to Rs 1.75 lakh crore. The current accounts savings accounts (CASA) ratio improved to 44% from 43% at the end of December 2017. Commenting on the performance, Sobti said,” The quarter witnessed a robust growth in its topline and core operating profit and going forward the bank will delve deep into creating innovative offerings to customers.”

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