IndusInd Bank Q1 PAT up 30%; seasonal asset quality issues weigh
IndusInd Bank It reported a consolidated net profit of Rs.2,124 crore for the first quarter of FY24, up by 30 per cent year-on-year, led by steady growth in net interest income (NII) and lower slippage. Sequentially, profit after taxes was 4 percent higher.
The consolidated earnings include the results of wholly owned subsidiary Bharat Financial Inclusion and associate company IndusInd Marketing and Financial Services.
The Bank’s NII rose by 18 per cent YoY to INR 4,867 crore. Net interest margin (NIM) for the quarter was 4.29 percent, up 8 basis points year-over-year and 1 basis point quarter-on-quarter, with Managing Director and CEO Sumant Kathpalya guiding NIM to stay in the 4.2-4.3 percent range for FY24.
Advances grew by 22 per cent YoY and 4 per cent QoQ to ₹3.0 crore. The year-over-year increase was driven by 21% growth in auto loans, 22% growth in corporate loans, 21% growth in business banking loans, 39% growth in credit cards, and 50% growth in other retail loans.
In meeting the earnings, Kathpalya said that the bulk of corporate growth was from the micro, small and medium-sized enterprises (MSME) and SME sectors, which grew by 10.4 percent, while large corporations grew by 3.5 percent, as the bank lends to entities that have a banking relationship Commercial only. RoWA (return on weighted assets) can be maintained at more than 2 percent.
He said that the bank will also continue to increase the register of microfinance institutions, with the aim of increasing its share to 15 percent of total loans from 11 percent, depending on how different markets work and the quality of the portfolio, adding that the bank diversifies its portfolio through commercial acquisitions and adding small banking products such as loans Scooter and home improvement loans.
It will also look to increase its home loan book from ₹650-675 crore to ₹15,000 crore over the next three years.
Slips for the quarter were ₹1,376 crore, largely offset by loan recoveries, promotions and write-offs of ₹1,261 crore. The provision coverage ratio was 71 percent.
-
Also read: IndusInd Bank has appointed Vikas Motu as Chief Operating Officer of Bharat Financial Inclusion
non-performing assets
The bank’s total NPA was 1.94 percent, better than 1.98 percent in the previous quarter and 2.35 percent in the prior year. The net NPA rate also improved slightly to 0.58 percent from 0.59 percent a quarter ago and 0.67 percent a year ago.
However, asset quality worsened for most consumer segments on a sequential basis, with the total NPA of the consumer portfolio rising to 2.41 percent from 2.37 percent.
Slips in auto finance were ₹581 crore as against ₹383 crore in the previous quarter, Kathpalya said, adding that the bank is, however, well positioned in the market segment and has a loyal customer base given its 33-year track record.
He added that the slippage was due to seasonal factors, but that overall credit costs would be around 1.0 percent for FY24, within the bank’s range of 0.9-1.2 percent.
Deposits were up 15 per cent YoY and 3 per cent QoQ at INR 3.5 crore as of June 30, with low cost CASA deposits accounting for 40 per cent of total deposits.
He said the focus will remain on cutting deposits, supported by the recent launch of the bank’s digital platform, and the goal of increasing the share of deposits in current and savings accounts to 43-45 percent.
On the Board’s approval of IndusInd International Holdings to increase its stake in the bank to 26 percent from the current 15 percent, Kathpalya said the bank is well capitalized and is not looking to raise any money at the moment. It has not had any capital discussions with the board and will only look to raise capital if CET-1 capital falls below 14 percent.
The bank’s capital adequacy ratio was 18.4 percent on June 30, of which 16.4 percent came from Tier 1 capital.