Home Market IndusInd Q1 net up 24%, asset quality improves

IndusInd Q1 net up 24%, asset quality improves


MUMBAI: IndusInd Banks net profit rose 24 per cent in the quarter ended June 2018 loans grew strongly, asset quality improved and slippages and credit costs fell. Net profit rose to Rs 1,036 crore from Rs 837 crore last year mainly due to a 29 per cent rise in the banks loan book.

The rise in profit was in line with a Bloomberg poll of 9 brokers which had predicted that the bank will post a net profit of Rs 1,030.70 crore.

“We have seen strong demand from companies as well as individuals. Vehicle loans particularly have turned around very smartly and has also helped in reducing our slippages. We believe we are in for a secular rise in loan growth in the next one year,” CEO Romesh Sobti said.

IndusInds corporate book grew 30 per cent while loans to individuals including retail loans grew 28 per cent.

The rise helped the bank increase its core net interest income (NII) which is the difference between what a bank earns as interest and what it pays for funds, by 20 per cent to Rs 2,122 crore from Rs 1,774 crore a year ago.

Net profit would have been higher had it not been for the Rs 86 crore mark to market hit the bank had to take due to a 50 basis points rise in government security yields during the quarter.

However, IndusInds net interest margin (NIM) dropped to 3.92 per cent from 3.97 per cent in the quarter ended March 2018 because of repricing of some loans and as cost of funds increased. NIM is the difference between the yield earned by the bank in interest and that it pays for deposits.

Sobti however said that the bank will maintain its NIM in the 3.9 per cent to 4 per cent range.

IndusInds asset quality has been always been better than the market and Sobti said he expects it to get better this year.

“We have guided for our credit costs to be in the 55 to 62 basis points range. We are currently at the lower end of that range. We have pretty much seen a full clean out of bad loans and with things improving on the macro we expect asset quality to only get better,” Sobti said.

IndusInds internal weighted average risk score has fallen to 1.77 per cent from 1.89 per cent indicating an improvement in credit outlook.

During the quarter ended June 2018, the bank reported net NPAs of 0.51 per cent unchanged from the quarter ended March 2018 but higher than the 0.44 per cent reported a year ago.

More importantly, additions to NPAs were only 1.31 per cent of the banks loan book down from 2.68 per cent in the quarter ended March 2018.

The banks shares however dropped 1 per cent to Rs 1,935 a piece as investors saw a good opportunity to book profits.

Original Article


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