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Last Updated : Jan 09, 2019 03:29 PM IST | Source: Moneycontrol.com

IndusInd Bank Q3 profit rises 5% at Rs 985 cr, IL&FS-linked provisions total Rs 600 cr so far

The bank said provisions and contingencies for the quarter stood at Rs 606.7 crore, which increased 3 percent sequentially and showed a massive rise of 157 percent over a year-ago period

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Private sector lender IndusInd Bank has reported a marginal 5 percent on year growth in the third quarter net profit at Rs 985 crore, dented by higher provisions mostly due to IL&FS exposure.

It was ahead of estimates of Rs 811.3 crore by CNBC-TV18 poll, driven by other income, operating profit and NII. The bottomline in the same period last year stood at Rs 936.25 crore.

Net interest income, the difference between interest earned and interest expended, increased sharply by 21 percent year-on-year to Rs 2,288.1 crore in the quarter ended December 2018 with credit growth of 35 percent YoY.

Net interest margin during the quarter contracted to 3.83 percent against 3.99 percent in the same period last year and 3.84 percent in the previous quarter.

Deposits growth in Q3 was 20 percent YoY.

The bank said provisions and contingencies for the quarter stood at Rs 606.7 crore, which increased 3 percent sequentially and showed a massive rise of 157 percent over a year-ago period.

Addressing the press conference, Romesh Sobti, Managing Director and CEO said, in case of IL&FS Group exposure, the bank made one-off prudential contingent provision of Rs 255 crore in Q3 on top of Rs 275 crore in Q2 this financial year. Total provisions attributable, so far, to this exposure is Rs 600 crore, he added.

He said advances granted to IL&FS Group against certain identified cash flows and pertaining to specific assets, are still standard as of December 2018. "The bank will make more provisions on IL&FS Group if it deserves."

Net credit cost increased to 17 bps (basis point on advances) in December quarter 2018 as against 14 bps in the corresponding period last year due to contingent provisions related to IL&FS.

Provision coverage ratio declined sharply to 48 percent in the quarter ended December 2018, against 56 percent in September quarter.

Asset quality weakened in the quarter. Gross non-performing assets as a percentage of gross advances increased to 1.13 percent against 1.09 in the previous quarter and net NPAs too were higher at 0.59 percent against 0.48 percent QoQ.

In absolute term, owing to fresh slippages, the bank reported gross NPAs at Rs 1,968.15 crore, higher by 10 percent over the previous quarter. Net NPAs for the quarter stood at Rs 1,029.27 crore, increased by 31 percent sequentially.

Fresh slippages nearly doubled to Rs 806 crore in Q3 against Rs 419 crore in previous quarter, but far lower than Nomura's expectation of Rs 2,400 crore.

IndusInd Bank said operating profit in Q3 surged 27 percent year-on-year to Rs 2,117 crore, and other income (non-operating income) increased 24 percent to Rs 1,469 crore driven by core fee income that increased 18 percent YoY.

The stock recovered from day's low to turn positive after the bank's clarification on provisions related to IL&FS. At 1456 hours IST, the stock was quoting at Rs 1,594.55, up Rs 16.95, or 1.07 percent.
First Published on Jan 9, 2019 02:34 pm
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