IndusInd Bank PAT up 61% YoY, FY23 loan growth of 20%

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IndusInd Bank Ltd today reported a 61% year-on-year increase in net profit for the quarter to ₹1,631 crore, helped by lower provisions and strong disbursements. However, the bank’s asset quality deteriorated sequentially, due to significant slippages in retail.

Total advances from the private sector lender rose 18% year on year to ₹1,631 crore as of June 30. Microfinance loans increased by 13% to ₹29,403 crore as of June 30, accounting for 12% of the bank’s loan portfolio. However, loans were 4% lower sequentially.

The lender’s net interest income rose 16% year on year to ₹4,125 crore, leading the NIM to improve to 4.21% from 4.06% a year ago.

The bank’s provisions fell 30% year-on-year and 14% quarter-on-quarter to Rs 1,251 crore. The provision coverage rate was 72% at June 30.

Credit growth

At the post-earnings conference, Managing Director and CEO Sumant Kathpalia said he expects credit growth for the current fiscal year to be around 20% as the bank also offsets the moderate growth of 12% seen in FY22, adding that micro-finance, credit cards and corporate lending remain the bank’s main focus areas.

The quarterly decline in the microfinance segment is explained by the fact that the bank took 40 to 45 days to transition to the new regulatory standards, which led to lower disbursements during the period, he said. , adding that he expects growth to resume previous levels of growth of 25 to 30 percent, given the strong demand.

Kathpalia is also seeing strong growth in the bank’s diamond funding portfolio, helped by the stabilization of the domestic currency and the opening of COVID-related restrictions in China and Hong Kong. Diamond loans were up 28% year-over-year, but only 1% sequentially for the current quarter, with Kathpalia pegging segment growth at 12% for FY23.

The bank also plans to roll out mortgage and real estate loans in the current quarter, he added.

Asset quality

IndusInd Bank’s asset quality deteriorated during the quarter due to further slippages of ₹2,250 crore, of which ₹1,647 crore came from the consumer lending segment.

The bank’s gross NPA (non-performing assets) ratio stood at 2.35% as of June 30, worse than 2.27% a quarter ago, but better than 2.88% a year ago. The net NPA ratio at 0.67% was also slightly lower at 0.64% in the prior quarter, but improved from 0.84% ​​a year ago.

The bank canceled loans worth ₹1.20 crore during the quarter, one of which was a media company account and another was a property account, Kathpalia said.

He added that the ₹921 crore slippages of the restructured book were in line with the bank’s valuation and are expected to stabilize going forward.

Profile of liabilities

IndusInd Bank’s deposits grew 13% year-on-year to ₹3.0 lakh crore, driven by a 16% growth in deposits in checking accounts and low-cost savings accounts. CASA deposits represent 43% of total liabilities as of June 30.

Kathpalia said the bank continues to focus on granularizing liabilities with the aim of increasing the share of CASA deposits to 45%, adding that he also sees a “big opportunity” in NRE deposits.

“We are trying to collect as many NRI deposits during this period as there is currently CRR and SLR exemption,” he said, adding that while this may increase the cost of deposits, the bank must be able to manage NIMs within the guided range.

The bank’s capital adequacy ratio was 18.1% as of June 30, of which Tier I capital was 16.5%.

Published on

July 20, 2022

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