IndusInd Bank Q2 results: Net profit falls 39.5% to Rs 1,331.29 crore

A rise in provisions led to a 39.5 per cent year on year (Y-o-Y) decline in IndusInd Bank’s net profit to Rs 1331.29 crore for the second quarter of the current financial year (Q2FY25).

 

Provisions for the second quarter nearly doubled to Rs 1,820 crore from Rs 974 crore in the year-ago period.

 

“We have created incremental contingent provisions of Rs 525 crore during the quarter. This is purely a prudent measure taken by us to further strengthen the balance sheet," said Sumant Kathpalia, MD & CEO of the Mumbai-based private sector lender.

 

He said IndusInd aligned its strategy focusing on ramping up retail deposit mobilisation, maintaining traction on secured loans, shrinking unsecured loans, and building conservative buffers on provisions.

 

The bank's net interest income (NII) rose by 5 per cent Y-o-Y to Rs 5,347 crore, while the net interest margin (NIM) moderated to 4.08 per cent, down from 4.29 per cent last year, partly due to a reduced share of microfinance loans, the bank said.

 

“The bank's NIM was impacted by 12 basis points due to a slowdown in microfinance disbursements and a reduction in the loan book. Additionally, the impact from a decline in the credit-deposit ratio and slower disbursements amounted to 4 basis points,” Kathpalia said.

 

“We continued growing our deposits to focus on granularising the deposit base, which added another 4 basis points of impact. Overall, these factors contributed to a total NIM impact of 16 to 17 basis points. However, I believe NIM will recover, especially if the MFI sector rebounds, which could lead to a stronger performance in Q3 or Q4,” he said.

 

Referring specifically to the MFI segment, Kathpalia said there were concerns over lending in Bihar, some districts of Jharkhand and Maharashtra and the bank was cautious about it. 

 

The yield on assets for the quarter stood at 9.69 per cent, while the cost of funds increased to 5.61 per cent, up from 5.40 per cent in the corresponding quarter of the previous year.

 

Deposits as of the end of the September quarter increased 15 per cent Y-o-Y, reaching Rs 4.1 trillion compared to Rs 3.5 trillion in the previous year. Casa (current account savings account) deposits grew to Rs 1.4 trillion with current account deposits at Rs 52,606 crore and savings account deposits at Rs 95,338 crore. Casa deposits were 36 per cent of total deposits, down from 39 per cent a year ago.

 

Advances grew by 13 per cent Y-o-Y to Rs 3.57 trillion during the quarter from Rs 3.1 trillion in the corresponding period last year. While the loan growth rate was lower than the 18-22 per cent range for the planning cycle (FY23-26), it will improve in the remaining part of FY25 on back of revival in the vehicles and microfinance segment, Kathpalia said.

 

The gross non-performing assets (NPA) ratio stood at 2.11 per cent of gross advances, up slightly from 2.02 per cent in the previous quarter, while net NPAs were at 0.64 per cent, up from 0.60 per cent.

 

Other income for the quarter amounted to Rs 2,185 crore, down from Rs 2,282 crore in the same period last year.