IndusInd Bank posts 32.92 pc jump in Q3 net, NPAs swell


PTI | Mumbai | Updated: 14-01-2020 20:30 IST | Created: 14-01-2020 20:30 IST
IndusInd Bank posts 32.92 pc jump in Q3 net, NPAs swell
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Private sector lender IndusInd Bank on Tuesday reported a 32.92 per cent jump in its December quarter consolidated net profit at Rs 1,309 crore on overall growth, but showed an uptick in non-performing assets. Its core net interest income was up 34 per cent to Rs 3,074 crore on a 20 per cent loan growth and a 0.15 per cent expansion in the net interest margin to 4.15 per cent. The fee income grew 22 per cent to Rs 1,790 crore.

Total income during the period under review increased to Rs 9,073.93 crore from Rs 7,232.32 crore in the third quarter of the previous fiscal, IndusInd Bank said in a regulatory filing. The bank, first off the mark to report December quarter numbers, had to set aside extra amount of money to up its provision coverage ratio to 53 per cent from the earlier 43 per cent, that dented the bottomline.

The bank's managing director and chief executive Romesh Sobti, who is set to retire in March, said it had to provide Rs 242 crore as provision for two accounts which were classified as "fraud-hit" following reports from forensic auditors. He explained that under the guidelines, the bank has to provide money over four quarters as provisions against frauds, and added that there is more pain in store by way of provisioning ahead.

Sobti, however, refused to share details of the accounts of the quantum of the money required to be set aside. Sources, however, identified these accounts as mortgage financier DHFL and travel company Cox and Kings. The bank reported a 76.49 per cent rise in slippages at Rs 1,945 crore as compared with the preceding September quarter, which were driven primarily by a travel company of Rs 282 crore, a diversified group which was earlier marked as "stressed" of Rs 250 crore and a paper company exposure of Rs 177 crore.

Slippages from the diversified group have been fully recovered, the bank said. Sobti said the net slippages number - after deducting the repayments, sale to asset reconstruction companies and enforcement of securities for recovery - were flat.

He also said that the exposure to the three accounts identified as stressed has come down to 0.47 per cent of the book as of September from 1.9 per cent three months ago, and added that the bank will stop reporting the number from now. The bank's overall provisions against the exposure to troubled infra financier IL&FS now stands at 75 per cent, and the amount of assets overdue for 61-90 days is 0.53 per cent of the Rs 2 lakh crore book.

Its exposure to the troubled non-bank lenders segment has reduced to 3.2 per cent of the book from the 3.7 per cent earlier, Sobti said, adding that the exposure is to pedigreed companies with niche focuses on retail segment. Its overall provisions rose to 1,043 crore from Rs 737 crore in the quarter-ago period.

The gross non-performing assets ratio was almost flat at 2.19 per cent when compared to the quarter-ago period, which is the right way to compare because of the merger with microlender Bharat Financial executed in the later half of 2019. The loan book growth was driven by a 44 per cent growth in the microlending book after a sluggish September quarter, 16 per cent rise in vehicle finance, 17 per cent in non-vehicle retail and only 8 per cent in corporate lending.

The overall operating environment was termed as one which is "getting tougher" by Sobti, with little optimism by way of greenshoots. He, however, said that the amount of stress generated by the NBFC and the realty sectors has not been as high as feared, and pitched for attention to the NBFC sector to push up the broader economic revival where consumer demand is sagging.

The bank's credit card book is also holding up as per the expectations, with a gross non-performing assets ratio of 2.6 per cent, its consumer banking head Sumant Kathpalia, who is widely tipped to succeed Sobti, told reporters. Sobti, who will retire on March 23 after turning 70, said the succession process is on track and moving as per plan.

The veteran banker said he will continue to be closely associated with the financial sector even after retirement. The bank is set to hold a meeting of 80 top executives next week to chalk out a five-year strategy, Sobti said, adding when he had joined the bank in 2008, there were only five senior leaders who called the shots.

The bank scrip closed 3.85 per cent down at Rs 1,481.10 apiece on BSE.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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