Net profit of IndusInd Bank plunged by 37 per cent in the quarter ended on December 31, 2020 on provisions for sour loans and a negligible loan growth, the private lender said on Friday.
The city-based bank’s net profit for the third quarter of ongoing fiscal year stood at Rs 830 crore as compared to Rs 1,309 crore in the year-ago period.
Bank’s core net interest income grew by 11 per cent to Rs 3,406 crore on the back of loan book being stable and a 0.03 per cent narrowing of the net interest margin (NIM) to 4.12 per cent.
The other income came down 8 per cent to Rs 1,646 crore, which resulted in an only 4 per cent increase in the overall income to Rs 5,052 crore.
Even as the income generation faced setbacks, it saw an additional pile up of potentially sour assets for which it had to set aside money as provisions which in turn ate into the profits.
The bank said the gross non-performing assets ratio would have come at 2.93 per cent if not for the Supreme Court standstill order on not recognizing NPAs, as against 2.18 per cent in the year-ago period and 2.21 per cent in September.
Bank’s managing director and chief executive Sumant Kathpalia said the overall provisions rose to Rs 1,853 crore that included Rs 1,100 crore of COVID-related provisions, as against Rs 1,043 crore in the year-ago period.
The bank decided to provide 100 per cent of the requirements for unsecured assets, while in the secured ones, it was lower, Kathpalia said.
Over Rs 537 crore of advances on credit cards or nearly 10 per cent of the overall portfolio were slippages, he said, adding that much of the cards where slippages have been observed are old customers.
He said nearly 2.30 per cent of the total assets will have to be restructured by the bank, and it has already approved 0.60 per cent and received requests for 1.20 per cent.
The restructuring includes two large corporate accounts, one each retail and housing space, he said.
The bank’s exposure to the troubled markets of Assam and West Bengal from a micro loans perspective is very low, and the overall collection efficiencies are also rising in the segment to over 90 per cent now.
Share of retail loans stood at 58 per cent as of December, and the same will be maintained between 55-62 per cent range in the forthcoming period, he said.
The bank expects a capital infusion of over Rs 2,000 crore from the promoter by February 18 and will not need additional infusion for at least six more months, he said.
Any capital will be needed for loan growth purposes or if any inorganic growth opportunity crops up, he said.