Private-sector lender IndusInd Bank on Tuesday reported a net profit of Rs 750.64 crore for the quarter ended December 31, up 29.2% from the corresponding period of the previous year, on the back of a 34.5% year-on-year (Y-o-Y) jump in net interest income (NII) to Rs 1,578.42 crore.
NII is the difference between interest earned and interest paid by the bank.
Non-interest income, which grew 21% to Rs 1,016.8 crore, also helped improve the bottom line.
The net interest margin (NIM) was unchanged from the year-ago period, and improved to 4% from 3.91% at the end of September.
The bank saw a 22.5% y-o-y rise in provisions before tax, which stood at Rs 216.85 crore. On a sequential basis, provisions rose 1.4%.
The asset quality worsened marginally, with the gross non-performing asset (NPA) ratio rising to 0.94% from 0.9% at the end of the previous quarter. The net NPA ratio stood at 0.39% at the end of December, as against 0.37% at the end of September.
Romesh Sobti, managing director and CEO, said: “Both gross and net NPAs are stable. Our ARC (asset reconstruction company) book, which is the sale book, actually went down because we recovered more than we sold. Net recovery was about R14 crore. So, our ARC book is now down to Rs 223 crore.”
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Sobti said the restructured book constitutes 0.41% of the portfolio, and while “a couple of accounts” had moved from the restructured book to the NPA category, the sums involved there were small. “We don’t see anything worrisome there.”
Slippages during the quarter remained unchanged sequentially at 1.1% of the portfolio. Total advances as on December 31 stood at Rs 1.02 lakh crore, up 25% from the previous year, while total deposits rose 38% y-o-y to Rs 1.19 lakh crore.
The current accounts savings accounts ratio improved to 37.04% from 34.98% at the end of December 2015.
Sobti said the bank had managed to maintain a steady NIM and grow its NII despite the disproportionate jump in deposits as the growth was driven by deposits in savings accounts, which earn only 4% interest. Such accounts saw a 56% rise y-o-y, he said. “So you are replacing high-cost deposits with these deposits, right? Your yield does not fall to the same extent because 70% of your book is still fixed-rate…If the CRR (cash reserve ratio) impact hadn’t been there, our NII would have been higher by another Rs 30-40 crore.”
The Reserve Bank of India had directed banks to maintain an incremental CRR of 100%, effective the fortnight ended November 26, on deposits between September 16 and November 11.
The move was aimed at sucking out around Rs 3.24 lakh crore of liquidity from the banking system, which was flooded with deposits after the announcement of the demonetisation of high-value currency notes.