IndusInd Bank (IIB) reported PAT grew 30% YoY to Rs 580 crore in Q3FY16, beating RCMLe of Rs 560 crore for the quarter. Loan growth was strong at 29% YoY with the retail book growing 27%/7% YoY/QoQ. A decline in cost of funds supported a 3bps QoQ improvement in NIMs to 3.91%. Growth in core fee income was also strong at 30%YoY.
Despite higher corporate book slippages, IIB’s asset quality remained stable with the proportion of stressed loans at sub-1%.
IIB’s loan book grew by 29% YoY in Q3FY16 while the CV book by 31% YoY, hinting towards a recovery in the CV cycle. A change in the loan mix in favour of the high-yielding retail portfolio should support NIMs, going ahead.
Headline GNPA increased marginally by 5bps QoQ to 0.82%. Slippages from the corporate segment increased to Rs 1.1bn from Rs 730mn in Q2. According to management, the RBI’s list of 150 truant borrowers does not come as a surprise, and the bank’s current slippages largely reflect these accounts. Post ARC sales worth Rs 410mn during the quarter, security receipts outstanding with the bank have increased to Rs 260 crore. Credit costs stood at 43bps for 9MFY16, with management confident of keeping costs below its full-year guidance of 60bps.
The management has highlighted that the Reserve Bank of India has asked banks to increase provisions on restructured accounts that fail to meet criteria mentioned in the master restructuring agreement. Banks would need to increase provisions on such accounts to 15% by providing 2.5% each quarter from Apr’16 onwards.