IndusInd Bank reports 18% yoy dip in pre-tax profits; sequentially down 76%

The lender reported a 45 per cent jump in net interest income at Rs 3,232 crore in Q4 FY20

IndusInd Bank reported an 18 per cent drop in its pre-tax profit on account of higher provisioning. The lender’s consolidated profit before tax (PBT) stood at Rs 416 crore in the quarter ending March (Q4FY20) compared to Rs 507 crore in the same period last financial year (Q4FY19). Sequentially, the PBT declined 76 per cent as in Q3FY20, the lender had reported a PBT of Rs 1,714 crore. 

The net profit of the private sector lender declined 12 per cent to Rs 315 crore in Q4FY20 compared to Rs 360 crore in Q4FY1 and sequentially, the net profit declined 77 per cent as the bank had reported a net profit of Rs 1300 crore in Q3FY20. 

The lender reported a 45 per cent jump in net interest income at Rs 3,232 crore in the reporting quarter (Q4FY20) compared to Rs 2,232 crore in Q4FY19. However, sequentially the net interest income grew 5.1 per cent.  The net interest margin of the bank stood at 4.25 per cent in Q4FY20 while it was 3.59 per cent in Q4FY19. In Q3FY20, the net interest margin of the lender stood at 4.15 per cent. 

 

Provision and contingencies for the lender rose 56 per cent at Rs 2,440 crore in Q4FY20 compared to Rs 1,560.69 crore in Q4FY19. Sequentially, provision and contigencies were up 134 per cent as the lender provided Rs 1,044 crore in Q3FY20. The lender said it recognized exposure in two entities with an outstanding amount of Rs 960.89 crore as fraud and provided for it in full. In Q4FY20, the bank took a hit of Rs 240.22 crore in its profit and loss account while a hit of Rs 480.44 crore was taken for the entire year. The balance amount will be reversed to Profit and Loss Account in the coming quarters of FY 21.

The bank has also made a floating provision to the tune of Rs 260 crore in light of the current circumstances where there is high level of uncertainty about the duration of the lockdown and the time required for things to get normal. Moreover, the bank has provided another Rs 23 crore during the quarter for the moratorium granted to eligible borrowers. The management sees atmost 80 bps increase in credit cost because of covid19.

“In March, our collections were upward of 95 per cent in all our portfolios and in the month of April we are educating the customers to pay the installments and we are seeing good results as they understand they have to pay extra interest”, said Sumant Kathpalia, MD & CEO, IndusInd Bank.

The asset quality of the lender took a hit with its gross non-performing assets (GNPA) at 2.45 per cent at the end of March quarter. In Q4FY19, the bank reported a GNPA of 2.1 per cent while in Q3FY20 the GNPA stood at 2.18 per cent. The net NPA of the bank stood at 0.91 per cent, down 30 basis points from 1.21 per cent in Q4FY19. The provision coverage ratio of the lender increased to 63.34 per cent which was higher than 52.53 per cent as of December 31, 2019 and 43.04 per cent as of March 31, 2019.

While year on year advances of the bank grew 11 per cent to Rs 2.06 trillion compared to Rs 1.86 trillion in Q4FY19, quarter on quarter the bank saw Rs 630 crore erosion in its deposit base.

It reported a capital adequacy ratio (CRAR) of 15.04 per cent at the end of March quarter FY20 compared to 14.16 per cent at the end of Q4FY19. Tier 1 CAR was at 14.57 per cent as of March 31, 2020 compared to 13.70 per cent as of March 31, 2019.

The bank has not declared any dividends out of profits for FY20 as per the RBI directive. Moreover, the management informed that they have not recieved any communication from the Reserve Bank of India (RBI) on thier proposal for promoters to increase stake in the bank to 26 per cent from 14 per cent presently.