IndusInd Bank slips into the red

IndusInd Bank today reported a loss of Rs 62.40 crore for the fourth quarter ended March 31, 2004 as against net profit of Rs 62.91 crore in January-March 2004.

Its total income for the reporting quarter declined to Rs 360.32 crore from Rs 373.03 crore in fourth quarter of 2004-05.

Its provisions and contingencies in Q4 of 2005-06 were Rs 102.45 crore, including time write-off of Rs 48.71 crore for one account, as against Rs 49.15 crore in the corresponding quarter of 2004-05, its managing director and chief executive Bhaskar Ghose said.

The private sector bank's net profit for financial year 2005-06 were sharply down to Rs 36.82 crore from Rs 210.15 crore in the previous financial year. The total income grew marginally to Rs 1,414.39 crore in 2005-06 from Rs 1,385.15 crore in 2004-05.

The rise in interest cost, impact of Reserve Bank of India's stringent guidelines on securitisation, increase in operating expenses due to network expansion and growing staff strength, and absence of trading profits on investments adversely affected the profitability, Ghose said.

Its deposits rose by 14.43 % to Rs 15,006.30 crore at end of March 2006 from Rs 13,114.28 crore as on March 31, 2005.

The share of low cost deposits - current accounts and savings accounts - was just 12.97 per cent, up marginally from 11 per cent for 2004-05.

The bank will give thrust to increase share of CASA deposits to 30-35 per cent and reduce dependence of bulk deposits in 2006-07. Its cost of deposits rose to 5.87 per cent from 5.39 per cent.

The advances were up at Rs 9,310.46 crore, net of securitisation, from Rs 8,999.75 crore at the of March 2005. It securitised assets worth Rs 1,600 crore in 2005-06. Its yield on advances dropped sharply to 9.66 % from 11.87 %.

The rise in cost of deposits and sharp decline in yield on advances squeezed its net interest margin (NIM) to 1.91per cent for 2005-06 from 2.88 per cent in 2004-05. With the growth in share of CASA deposits and improving yield on advances, the bank expects NIM to touch 3 per cent in 2006-07.

The net non-performing assets were down to 2.09 per cent from 2.71 per cent.

Its net worth, capital plus reserves, rose marginally to Rs 866 crore at end of 2005-06 from Rs 820 crore. The capital adequacy was down to 10.54 per cent from 11.62 per cent.

At, present bank is adequately capitalised for growth in 2006-07 (25 per cent growth in deposits and 30 per cent in advances). If required, the bank may tap market with hybrid capital bonds.