Mumbai: Private-sector lender IndusInd Bank’s profit climbed 38% in the June quarter to Rs 1,433 crore, aided by growth in interest income and expansion in the loan book after the high-street bank completed its merger with micro-financier Bharat Financial.
Asset quality remained largely stable as the bank completed provisions on write-offs for loans to IL&FS, which went bankrupt in September 2018. Gross NPA percentage came in at 2.15% against 2.10% in the March quarter.
Standalone credit growth was at 26%, with the loan book now at Rs 1.89 lakh crore. Consolidated loan growth was at 28% as the lenders have added about Rs 4,000 crore worth of Bharat Finance’s micro-finance portfolio to the overall book, which now stands at 1.94 lakh.
“The merger has contributed to a strong capital position for us as well, with the capital adequacy ratio, including the promoter preference capital, now at 15.8% as against 14.16% in the last quarter,” said Romesh Sobti, managing director and CEO, IndusInd Bank. “Our loan growth at 26% is well above the industry average of 12% in the quarter. We would look to grow our books in the mid-20% range over the next few quarters.”
Sobti said the bank’s exposure to the most stressed sectors declined sequentially. Leaders in even the most distressed sectors continued to receive adequate financing, he said.
“Our exposure to speculated stressed companies in the housing finance, media and NBFC sectors have come down to 1.67% from 1.9% in the last quarter,” said Sobti. “We have seen that even in sectors known to be going through turmoil such as real estate, NBFC, auto and to some extent renewable goods, the stress is largely company specific; the strong ones are still getting financing from the banks.”
The vehicle loan portfolio, which at Rs 55,046 crore makes up about 28% of the overall loan book, registered a yearly growth of 24% despite the industry wide shrinkage in vehicle sales.
“Even as the auto industry slowed down, the overall credit pie moved toward the stable lenders such as banks and big NBFCs,” said SV Parthasarathy, head consumer finance, IndusInd Bank.
Net interest income, or the revenue a bank makes on its loans, came in at Rs 2,844 crore, up 34% from Rs 2,232 crore in the corresponding quarter last year.
Net interest margin, or the margin a bank makes on its loans, was 4.05% in the quarter, up from 3.92% a year ago.
Source: Economic Times