IndusInd Bank Q1 net rises 42% on other income and NII

Moneycontrol Bureau

Private sector lender IndusInd Bank kick-started the April-June quarter earnings (FY14) season by reporting 42 percent year-on-year spike in its net profit at Rs 335 crore. A robust growth in other income and net interest income (NII) or the difference between interest earned and paid out, helped the lender to post forecast-beating net profit.

Analysts on an average had expected the bank to report 34 percent growth in profit at Rs 315, according to CNBC-TV18 poll. NII was seen going up by 41 percent to Rs 682 crore in the first quarter.

During the quarter, other income surged 48 percent y-o-y to Rs 471 crore while NII increased 40 percent to Rs 680 crore. The bank expanded its loan book by 27 percent to Rs 47,425 crore.

"The bank has shown consistent and healthy results in stressed operating environment.  IndusInd Bank's gross and net NPA percentage have shrunk, which is a testimony to the quality of the bank's loan book. The growth in core fee income at 31 percent and NIM at 3.72 percent has yet again showcased our consistent performance," Romesh Sobti, MD & CEO, IndusInd Bank said in a release.

Gross non-performing asset (NPA) ratio rose to 1.06 percent as against 0.97 percent a year ago. Net NPA ratio however, improved from 0.27 percent to 0.21 percent suggesting that the lender has made higher provisions for bad loans.

"In line with the policy framework approved by the Board of Directors of the bank for creation of floating provision, the bank has created floating provision of Rs 50 crore during the quarter ended June 30, 2013. This provision is made in excess of minimum requirements prescribed by RBI," the bank said in a release.

Provisions and contingencies shot up nearly three-fold from Rs 53 crore to Rs 132 crore during the three-month period.

At a time when most of banks are struggling to collect deposits, IndusInd Bank managed to mop up significant public deposits, the cheap source of funds for any lender. However, it was on a lower base.

As on June 30, 2013; total deposits soared 23 percent y-o-y to Rs 55,660 crore. The share of current and savings account deposits (CASA) improved from 28 percent to 30 percent. Banks gernerally pay 0-4 percent interest on CASA. Better CASA helps earn good interest margin.

IndusInd shares on Wednesday fell nearly 2 percent to close the day's trading at Rs 492. Although the net profit growth beat market expectation but it did not result in any exuberance. The slight deterioration in gross NPA ratio added to a little market apprehension.  

saikat.das@network18online.com