IndusInd Bank on Tuesday reported a 112% year-on-year (y-o-y) jump in net profit to Rs 975 crore for the quarter ended June 2021, on the back of reduced provisioning and higher other income. Provisions declined 18% YoY to Rs 1,844 crore, but remained flat sequentially. The lender’s operating profit increased 9.4% YoY to Rs 3,130 crore as the net interest income (NII) grew 8% YoY to Rs 3,564 crore. Other income increased 18% YoY to Rs 1,781 crore.
The net interest margins (NIM) declined 22 basis point (bps) YoY and seven bps quarter on quarter (QoQ) to 4.06%.
MD and CEO Sumant Kathpalia said, “The economy once again showed resilience with higher activity levels compared to the first wave, supported by effective fiscal and monetary support. The first few weeks of July are giving us confidence that collection efficiency is returning as clients are paying back in time.” The collection efficiency fell in April and May, but quickly picked up in June to 96%, he added.
The lender’s asset quality worsened during the June quarter. Gross non-performing assets (NPAs) ratio increased 21 basis points to 2.88%, compared to gross NPAs of 2.67% in the previous quarter. Similarly, net NPAs ratio increased 15 basis points to 0.84% from 0.69% in the March quarter. In the quarter ended June 30, the bank added Rs 2,762 crore worth bad loans, owing to collection issues during the quarter. Of this, Rs 2,342 crore came from the consumer finance book.
“The bank has followed a conservative provisioning approach with net NPA of 0.84% and a surplus provision of Rs 2,050 crore outside this for contingencies if any,” Kathpalia said. The lender has strengthened its balance sheet by increasing provision coverage ratio (PCR) to 72% in June 2021 from 67% in June 2020.
Non-interest income got a boost from core-fee income, which increased 78% YoY to Rs 1,214 crore. Operating expenses, however, grew 14% YoY to Rs 2,166 crore in the June quarter, as against Rs 1,902 crore for the corresponding quarter of the previous year.
Advances grew 6% YoY to Rs 2.1 lakh crore, but remained flat sequentially. The bank was cautious in loan growth, given the challenging operating environment, Kathpalia said. Corporate advances, however, rose 10% YoY to Rs 92,407 crore. “We’re seeing a lot of demand from large corporate borrowers. The only issue there is price. Still, we will manage to either be at industry growth levels, or might exceed it in corporate lending,” Kathpalia said, adding the bank may report credit growth of 16-18% for the ongoing fiscal.
Deposits grew 26% YoY and 4% QoQ to Rs 2.7 lakh crore. Current account savings account (CASA) deposits increased to Rs 1,12,349 crore with current account deposits at Rs 32,422 crore and saving account deposits at Rs 79,927 crore. CASA deposits comprised 42% of total deposits as of June 30, 2021, compared to 40% during Q1FY21.The capital adequacy ratio (CAR) stood at 17.57% during the quarter under review, compared to 15.16% as on June 30, 2020.