Q1 Results: IndusInd Bank’s Profit Beats Estimates
The lender reported a profit of Rs 1,432.5 crore, according to its exchange filing.
IndusInd Bank Ltd.’s profit beat analyst estimates in a quarter when it completed its merger with microlender Bharat Financial Inclusion Ltd.
The lender reported a profit of Rs 1,432.5 crore, according to its exchange filing. That’s higher than the Rs 1,235-crore estimate of analysts tracked by Bloomberg. Net interest income, or the bank’s core income, stood at Rs 2,844 crore—matching the Rs 2,850-crore estimate.
The year-on-year figures aren’t comparable due to the bank’s merger with Bharat Financial Inclusion during the quarter. Gross bad loans was 2.15 percent in the quarter, while net non-performing assets stood at 1.23 percent.
The lender’s provision against bad loans was Rs 430 crore. Its provision coverage ratio—an indicator of balance sheet strength—was 43 percent. A provision coverage ratio of about 70 percent is considered healthy.
“The provisions may be incrementally on the higher end in the coming quarters as it is less in the current quarter,” said Anush Raheja, research analyst at LKP Securities, told BloombergQuint in an interview. “Overall, the growth and maintaining margins isn’t an issue, the problematic concerns remain over the future NPAs that may slip in.”
Net interest margin stood at 4.05 percent. That parameter may face some pressure over the next few quarters, following a 15 basis points cut in marginal cost of funds-based lending rate (MCLR) since January despite a boost due to the merger, as per a Bloomberg Intelligence report released prior to the earnings.
Bharat Financial Inclusion Merger
The merger process with Bharat Financial Inclusion is now complete, said Romesh Sobti, managing director and chief executive officer of IndusInd Bank, in a press meet.
“Shareholders of Bharat Financial Inclusion have been issued IndusInd Bank’s shares.”
According to the terms of the merger, shareholders were to receive 639 shares of IndusInd Bank for every 1,000 shares held in Bharat Financial Inclusion.
IndusInd Bank acquired India’s first for-profit microlender last year to expand its reach and scale up its microfinance business. That boosted the bank’s customer base by around 2 crore and more than doubled its branch count.
Shares of IndusInd Bank fluctuated between gains and losses to trade flat as of 2:17 p.m. after the earnings announcement, against a 0.3 percent gain in the Nifty Index. The shares have fallen 20 percent in the last 12 months.
Other Highlights (For Q1):
- Credit cost at 16 basis points.
- Core fee income at Rs 1,402 crore.
- Other fee income stood at 1,663 crore.
- Net slippages at 0.5 percent; recoveries at 1 percent.
- Exposure to three stressed groups at 1.67 percent.
