Signage for IndusInd Bank Ltd. is displayed in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

IndusInd Bank’s Profit Grows 25%, Asset Quality Stable

IndusInd Bank Ltd.’s profit growth matched analysts’ estimates in the July to September quarter. Asset quality remained stable.

Net profit rose 24.9 percent year-on-year to Rs 880 crore, according to the private lender’s exchange filing. The consensus estimate of analysts tracked by Bloomberg stood at Rs 704.3 crore.

Net interest income rose 24.7 percent to Rs 1,821 crore. Analysts tracked by Bloomberg had pegged the bank’s core income at Rs 1,841 crore. The lender reported the lowest NII growth in the last nine quarters, according to data compiled by Bloomberg.

IndusInd Bank’s Profit Grows 25%, Asset Quality Stable

Gross non-performing assets remained largely unchanged at Rs 1,347 crore. Gross NPAs as a percentage of total loan book fell to 1.08 percent from 1.09 percent in the quarter-ended June, while net NPA ratio remained stable at 0.44 percent. Provisions set aside for bad loans fell 5.2 percent to Rs 293.8 crore on a quarter-on-quarter basis.

The bank took a Rs 36 crore hit on its balance sheet due to its exposure to six of the 28 stressed accounts identified by the Reserve Bank of India in a second list that may need to be referred for insolvency proceedings, Chief Executive Officer Romesh Sobti told reporters at the press conference following the announcement of earnings.

The loan book grew 24.5 percent year-on-year, in line with estimates while deposits rose 26 percent in the same period. Currently, retail and wholesale loans constitute 40 percent and 60 percent of its loan book respectively. The private lender is looking to reach a 50-50 wholesale-retail constitution by March 2020, Sobti said.

Bharat Financial Merger: Talks Still On

Exclusive talks for a potential merger with microfinance lender Bharat Financial Inclusion Ltd. are still on, Sobti clarified. The two entities entered into discussions earlier this year.

“We have strong faith in the microfinance business and want to grow in it organically and inorganically,” he said, adding that the segment is expected to grow to 5 percent in three years. The lender’s microfinance book is currently a little below Rs 3,000 crore - 2.5 percent of the total loan book.

Other Highlights

  • Capital adequacy ratio stood at 15.63 percent compared to 16.18 percent quarter-on-quarter.
  • Loan book grew 24.5 percent year-on-year, in line with estimates.
  • Deposits grew 26 percent year-on-year.
  • Net interest margin stood at 4 percent versus 3.97 percent year-on-year.
  • Current account and savings account (CASA) ratio rose to 42.26 percent compared to 36.53 percent year-on-year.

Shares of IndusInd Bank rose 1.3 percent to Rs 1,739 after the announcement of the results.

The stock gained 57 percent in 2017 compared to NSE Bank Nifty Index’s 32.8 percent increase. IndusInd is the second best performer in the index, after Federal Bank Ltd. this year. The NSE Nifty50 Index rose 22.9 percent year to date.