 "IndusInd Bank net profit up 30%")
Net interest income, the difference between interest earned and interest expended, grew 31 per cent to Rs 1,094 crore, compared to Rs 833 crore in the second quarter of FY15.
Other income, which includes gains from distribution income, treasury etc, was up 32 per cent to Rs 784 crore on the back of higher distribution fee from mutual funds and health insurance and higher foreign exchange income.
Even on the asset quality front, the bank fared well with the gross non-performing assets (NPA) coming down to 0.77 per cent in the quarter ended September compared to 1.08 per cent a year ago. In the same period, net NPA also declined to 0.31 per cent from 0.33 per cent in the year-ago period.
Despite asset quality being stable, the bank doubled its provisions to Rs 158 crore from Rs 73 crore. Romesh Sobti, managing director and CEO, IndusInd Bank, explained the rise in provisioning was to account for additions in the loan book. “We have made a lot of standard asset provisioning for the new loans that were added during the quarter. We added a total of Rs 5,000 crore in this quarter, of which Rs 4,100 crore were on account of the diamond financing business.”
In the September quarter, the lender integrated the diamond and jewellery financing business it had acquired from Royal Bank of Scotland earlier this year.
Net interest margin, a key indicator of profitability, also increased 25 basis points (bps) to 3.88 per cent. The management said this was on the back of the capital raising done by the lender and also on the back of change in mix in loan book with the focus tilting towards retail.
In this quarter, the bank completed a qualified institutional placement (QIP) issue where it raised Rs 4,327.98 crore and Rs 752.74 crore via preferential allotment. This capital-raising exercise by the bank has boosted the capital adequacy ratio to 16.52 per cent. Sobti said the bank does not plan to raise capital for the next three years.
The lender has also decided to reduce its base rate next week. This comes after the Reserve Bank of India slashed the repo rate by 50 bps last week. At present, IndusInd Bank’s base rate at 10.85 per cent is higher than that of peers.
The share of current and savings account deposits or the low cost deposits, improved to 34.74 per cent from 33.89 per cent. Total deposits increased by 22 per cent and advances grew 31 per cent.
“Cost of deposit has been falling. Our asset liability committee has met and we will be announcing the reduction in base rate by next week. Even deposit rates will come down,” said Sobti.
IndusInd Bank in advance talks for tie-up with payments banks: Sobti
IndusInd bank is also exploring opportunities to tie-up with payments banks. Recently, RBI has granted licence to 11 applicants for payments banks.
"We would like to collaborate with a payments bank and we are in talks at the moment. We can also look at an equity stake," said Sobti.
Payment Banks can accept deposits of up to Rs 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.