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 lowered provisioning and greater other earnings. Provisions declined 18% YoY to Rs 1,844 crore, but remained flat sequentially. The lender’s operating profit improved 9.4% YoY to Rs 3,130 crore as the net interest earnings (NII) grew 8% YoY to Rs 3,564 crore. Other earnings improved 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 mentioned, “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 speedily picked up in June to 96%, he added.
The lender’s asset high quality worsened in the course of the June quarter. Gross non-performing assets (NPAs) ratio improved 21 basis points to 2.88%, compared to gross NPAs of 2.67% in the preceding quarter. Similarly, net NPAs ratio improved 15 basis points to .84% from .69% in the March quarter. In the quarter ended June 30, the bank added Rs 2,762 crore worth poor loans, owing to collection challenges in the course of the quarter. Of this, Rs 2,342 crore came from the customer 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 mentioned. The lender has strengthened its balance sheet by rising provision coverage ratio (PCR) to 72% in June 2021 from 67% in June 2020.
Non-interest earnings got a enhance from core-charge earnings, which improved 78% YoY to Rs 1,214 crore. Operating expenditures, nonetheless, grew 14% YoY to Rs 2,166 crore in the June quarter, as against Rs 1,902 crore for the corresponding quarter of the preceding year.
Advances grew 6% YoY to Rs 2.1 lakh crore, but remained flat sequentially. The bank was cautious in loan development, provided the difficult operating atmosphere, Kathpalia mentioned. Corporate advances, nonetheless, 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 mentioned, adding the bank may perhaps report credit development 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 improved to Rs 1,12,349 crore with existing 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% in the course of Q1FY21.The capital adequacy ratio (Vehicle) stood at 17.57% in the course of the quarter beneath assessment, compared to 15.16% as on June 30, 2020.