Bharat Fin merger boosts Indusind net 38%, but NPA doubles

Private sector lender Indusind Bank Friday reported a 38 percent growth in net income for the June quarter at Rs 1,433 crore, boosted by the merger of micro-lender Bharat Financial's good show. The management stressed that the bank has come out of the asset quality woes which had plagued it for the last few quarters due to exposure to the bankrupt infra lender IL&FS.

Core net interest income grew 34 percent to Rs 2,844 crore on a 28 percent loan growth and an expansion of net interest margin to 4.05 percent. Managing director and chief executive Ramesh Sobti said a heavy dip in money market rates in June helped boost the margin and the bank is aiming for a further 0.15 percent expansion in the same in the next few quarters.

He said its overall loan growth came in at 28 percent, but on a standalone basis this was printed at 26 percent. Despite the slowdown in auto sales, Sobti said the bank was able to grow its mainstay of vehicle finance book by 24 percent.

The gross non-performing assets ratio almost doubled to 2.15 percent from 1.15 a year ago and marginally increased from 2.10 percent in March. Sobti said credit cost stood at 0.16 percent from 0.14 percent, which illustrates that the business is as usual.

Overall provisions rose to Rs 430 crore from Rs 350 crore a year ago but massively improved from Rs 1,560 crore in the preceding quarter. Disclosing the special mention account data, which denote early signs of stress, Sobti said only 48 accounts are in the over 30-days due list, this constitute on 0.35 percent of the overall book.

Without mentioning the names, he said exposure to the stressed accounts in the media, a large conglomerate and a non-banking lender stood at 1.67 percent and all are standard. Stressing that the issues being faced are company specific and not sectoral, he said the bank has continued lending to "pedigreed" companies in these stressed sectors.

Overall capital adequacy increased to 14.90 percent as against 14.16 percent in March, courtesy the inclusion of Bharat Financial's base. Bharat Financial managing director MR Rao said the company, which is now a fully-owned subsidiary of the bank, is going slow on Odisha and Bengal due to "overheating" arising from double borrowings from microlenders or high averages.

These two contribute a fourth of its book, he said. As the microlender's loans from other banks had to be discontinued, it had a 2 percentage points benefit to the bank's loan book expansion, Sobti said.

The Indusind counter closed almost 2 percent down at Rs 1,510.35 on the BSE, whose benchmark slipped 0.22 percent in a choppy trade..