Private sector lender IndusInd Bank beat Street expectations to report a 50% year-on-year jump in third-quarter net profit, aided by loan expansions and a rise in fee incomes.
In the October-December period, the bank’s net profit was at Rs 1,242 crore versus Rs 830 crore in the corresponding period last financial year.
“While Covid remains a risk to watch out for, the implications of the recent wave on our businesses have been limited,” said Sumant Kathpalia, MD & CEO, IndusInd Bank. “We are thus committed to executing our strategy quarter on quarter. Credit is likely to expand 5-6% quarter-on-quarter from here on.”
While the bank increased loans to small and mid-sized corporates, it slowed disbursements to the microfinance sector.
The bank expanded loans 10% to Rs 2.29 lakh crore as it extended credit to companies and individuals with the local economy reopening shrugging off pandemic debris.
Other income was at Rs 1,877 crore, an increase of 14% year-on-year. Core Fee income grew by 9% to Rs 1,519 crores.
Asset quality showed signs of improvements with the bad loan ratios contracting by 9-29 basis points from the preceding quarter. A basis point is 0.01 percentage point.
Net Interest Margin (NIM), a gauge for profitability, was at 4.10 percent, which is better than the preceding quarter but marginally fell short of third quarter 2020-21.
Net interest income, or the differential between interest earned and paid, expanded 11% y-o-y to Rs 3,794 crore.
The bank seems to have navigated economic sluggishness well with the falling number of virus infections. While it garnered public deposits outpacing industry average amid a soft interest rate regime, the lender recruited more people with rising business volumes.
Deposits increased 19 percent y-o-y to Rs 2.84 lakh crore during the three-month period. The share of low-cost current and savings account deposits formed 42 percent of total deposits.
Headcounts at IndusInd Bank rose nearly 10 percent to 32,225 people as on December 31.
Earlier in the quarter, the bank faced allegations of loan ever-greening in the micro finance business it carries out through Bharat Financial Inclusion, a wholly owned subsidiary.
An internal committee has already submitted its report on the same. An external consultant will likely submit the final report on it in the next two weeks.
The internal report is as per management guidance, but there may be procedural lapses for any particular transaction related to MFIs, Kathpalia said.
IndusInd Bank has fully provided for the MFI exposure at Rs 179 crore irrespective of any report, he said.
Since the beginning of the third quarter IndusInd Bank shares have shrunk over 18 percent, underperforming the broader sector index BSE Bankex that inched up 1.76 percent during the same period.
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