IndusInd Bank Q3 Results: Profit Misses Estimates, Asset Quality Improves
IndusInd Bank Ltd.’s net profit missed estimates in the quarter ended December as the private lender continued to provision for bad loans and other risks.
Net profit fell 6 percent quarter-on-quarter to Rs 1,300 crore, according to the exchange filing. That compares with the Rs 1,403-crore consensus estimate of analysts tracked by Bloomberg. The bank’s performance cannot be compared with the corresponding year-ago period since it merged with Bharat Financial Inclusion Ltd. in July 2019.
IndusInd Bank’s other income increased 3.6 percent quarter-on-quarter to Rs 1,790 crore. Its net interest income, or core income, rose 5.6 percent to Rs 3,074 crore, compared with a Rs 3,041-crore estimate.
The merged entity’s asset quality also improved. Its gross non-performing asset ratio fell to 2.18 percent in the October-December period from 2.19 percent in the preceding quarter, while the net NPA ratio dropped to 1.05 percent from 1.12 percent.
The lender’s provisions, however, grew 41 percent over the previous quarter to Rs 1,043.45 crore. The provision coverage ratio now stands at 53 percent, outgoing Chief Executive Officer Romesh Sobti said during the press conference.
This was Sobti’s last presentation of IndusInd Bank’s quarterly results. Sumant Kathpalia, the head of consumer loans at the private bank, succeeds Sobti in March.
He leaves when the banking industry is grappling with a low credit growth in a slowing economy. Both consumption and investment in the Indian economy have taken a hit with GDP growth falling to 4.5 percent in the quarter ended September.
The “operating environment is as tough as it gets”, Sobti said. While some green shoots are visible as there is some stabilisation of activities at the lower levels, it is still early days to give a “universal statement” regarding this, he said. “[But] there is evidence that flow of credit to NBFCs is no longer falling...things are gradually looking up.”
“Succession will be as smooth as we think it should be,” Sobti said, adding that he will continue to work within the financial sector.
IndusInd Bank Q3: Other Key Highlights From The Press Conference
- Big highlight of the quarter is 30 percent growth in operating profit.
- Vehicle finance up 16 percent.
- Corporate loan book up 8 percent.
- Have seen repayments and recoveries during the third quarter.
- Loans to NBFCs, housing finance companies microfinance institutions stand at 3.2 percent of total loan book, versus 3.7 percent in the previous quarter.
- Special mention account-1 at 0.64 percent of total loan book.
- SMA-2 at 0.53 percent of total loan book.
- Provision coverage ratio for the IL&FS account is now at 75 percent. IndusInd Bank had disclosed Rs 3,003-crore exposure to IL&FS Group after the infrastructure conglomerate’s surprise defaults.
IndusInd Bank’s shares rose as much as 1.9 percent after the company announced its December quarter results compared with a 0.2 percent decline in the Nifty Banking Index. The stock has risen 3.94 percent in the last 12 months compared, underperforming peers in the banking gauge that rose 17.8 percent during the period.