IndusInd Bank Q2 net zooms 73%; MFI, vehicle loans show higher NPAs

The city-based lender reported some stress in its microfinance and vehicular loans book but stressed that from a provisions perspective, it is adequately covered to take care of any eventuality.The banks core net interest income rose 12 per cent to 3,658 crore, driven by a 10 per cent growth in advances - the highest in 18 months - and the net interest margin being stable at 4.07 per cent.The fee income increased to Rs 1,838 crore from Rs 1,554 crore in the year-ago period, which further aided the profit.

Private sector lender IndusInd Bank on Wednesday posted a 73 per cent jump in the consolidated net for the September quarter to Rs 663 crore on credit growth and lower provisions. The city-based lender reported some stress in its microfinance and vehicular loans book but stressed that from a provisions perspective, it is adequately covered to take care of any eventuality.

The bank's core net interest income rose 12 per cent to 3,658 crore, driven by a 10 per cent growth in advances - the highest in 18 months - and the net interest margin being stable at 4.07 per cent.

The fee income increased to Rs 1,838 crore from Rs 1,554 crore in the year-ago period, which further aided the profit. It witnessed gross slippages of Rs 2,658 crore during the quarter, with a bulk of them coming from the two segments, its chief executive and managing director Sumant Kathpalia told reporters.

The gross non-performing assets ratio stood at 2.77 per cent as of September 30, against 2.88 per cent three months ago and 2.21 per cent a year ago.

The overall provisions were reduced to Rs 1,703 crore from Rs 1,964 crore in the year-ago period and Rs 1,844 crore in the previous quarter.

Kathpalia said the bank has maintained the provision coverage ratio at the earlier 72 per cent and has made additional provisions for a stressed telecom company, to stress that the legacy asset quality issues which were faced by the lender are behind it now. It carries Rs 3,515 crore of excess provisions to take care of any eventualities, which includes Rs 1,435 crore for accounts that were restructured under the two dispensations allowed by the RBI after the first and second wave of the pandemic.

"As the impact of COVID and legacy exposures are diminishing every quarter, we are well poised to show to underlying growth and profitability of the organisation," Kathpalia said. He said most of the retail products have reached a pre-COVID level from a disbursements perspective, and collections have also improved. Its overall capital adequacy ratio stood at 17.37 per cent as of September 30.

When asked about reports of the bank being in the race to acquire American lender Citi's domestic retail business, Kathpalia said it does not comment on speculation and later also said that this is not the right to comment on inorganic growth opportunities that it reviews regularly. The bank scrip closed 1.11 per cent down at Rs 1,141.85 apiece on the BSE on Wednesday, as against a 0.34 per cent correction on the benchmark.

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