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IndusInd Bank Q1 net rises 25% on interest, fee income

IndusInd Bank

Mumbai: Private sector IndusInd Bank today posted a 25 per cent rise in its June quarter net profit at Rs 525 crore driven by increase in interest and fee income.

The mid-sized lender had posted a post-tax net profit of Rs 421 crore in the year ago period.

Net interest income was up 22 per cent to Rs 980.66 crore, while the other income rose 26 per cent to Rs 724.34 crore during in the first quarter ended June 30.

The other income component was helped by a 43 per cent rise in fees earned from distributing insurance, mutual funds and cards at Rs 106.99 crore and a 42 per cent jump in investment banking revenues at Rs 122.94 crore, Managing Director and Chief Executive Romesh Sobti told reporters.

Income from treasury operations, including money market, forex trading was up 40 per cent at Rs 125.41 crore.

The gross non-performing assets improved to 0.79 per cent of total advances from 0.81 per cent in March quarter. Sobti said asset quality is very stable.

Net interest margin was stable at 3.68 per cent.

At Rs 453 crore, the share of bank’s restructured assets rose to 0.63 per cent of advances from the 0.53 per cent in the March quarter.

Sobti said the bank has raised Rs 4,327 crore through an institutional placement of shares earlier this month. It will be raising another Rs 750 crore through a preferential issue of shares to promoters later this month, to maintain their shareholding at 15 per cent.

IndusInd Bank Chief Financial Officer S V Zaregaonkar said the fresh capital will sustain for three years, assuming a 30 per cent credit growth, which will take up the capital adequacy to over 17 per cent from the present 12.43 per cent.

Sobti said the fresh capital will be used only for “organic growth” in loans and not for any other purpose.

The bank posted a 23 per cent growth in advances over the last year, driven by a healthy 27 per cent jump in corporate advances and also a 33 per cent rise in the bank’s mainstay of commercial vehicle finance.

A senior bank official said the loan demand is driven by replacements of older vehicles and fresh demand on account of a surge in economic activity is yet to set in, which the bank expects to come in only after September.

During the quarter, the provisions rose to Rs 123.33 crore from the year ago’s Rs 110.40 crore, which was attributed by Sobti largely to a deferred provision of Rs 32 crore on losses on account of loan sales to Asset Reconstruction Companies (ARCs) done last fiscal.

Sobti said there was a visible downward pressure on rates and banks are forced to compress spreads over the base rate while selling loans, especially to the better rated companies.

The bank’s scrip gained 3.27 per cent to close at Rs 923.90 a piece on BSE.

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