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IndusInd Bank reported on Monday a 77 percent sequential decrease in net independent earnings by Rs 301.84 crore in the March quarter of fiscal year 20 (Q4FY20), against Rs 1,300.2 crore recorded in the December quarter of the current tax (Q3FY20). On a consolidated basis, the net profit was Rs 315.25 crore.
The bank’s earnings are not comparable annually due to its merger with Bharat Financial in July 2019. In Q4FY19, the PAT stood at Rs 360.1 crore.
The numbers met Street’s estimates that they had anticipated a more than 70 percent quarterly decline in net profit.
Nomura analysts, for example, had estimated that the bank’s PAT would plummet 76 percent quarter-on-quarter to Rs 310.6 crore. READ HERE
The lender, which reported its first quarterly result since its new chief executive officer (CEO), Sumant Kathpalia, took over, shelved massive provisions at Rs 2.44 crore. It was a jump of 133.82 percent from Rs 1,043.5 crore forecast in Q3FY20.
To cushion the uncertainties that arise due to the outbreak of the coronavirus pandemic (Covid-19), the bank has planned Rs 260 crore in the provisions and contingencies segment.
“The extent to which the Covid-19 pandemic will impact the bank’s operations and financial results depends on future developments, which are highly uncertain. In this context, during the quarter and year ended March 31, 2020, the Bank has made a buffer / float provisioning countercycle of Rs 260 crores, “he said.
Furthermore, in light of the moratorium extended by the Reserve Bank of India (RBI) regarding providing relief to borrowers due to the Covid-19 pandemic, the bank has reserved provisions of Rs 23 million during the quarter and year ending March 31, 2020.
Net interest income (NII) from the Mumbai-based private lender stood at Rs 3,231.2 million during the recently ended quarter, up 5.1 percent from the Rs 3,074.02 million recorded in the third quarter 2016.
The quality of the bank’s assets also worsened during the review quarter. Gross non-productive assets (GNPA) reached Rs 5,146.74 crore, above Rs 4,578.43 crore reported in the third quarter of 2016. In terms of proportion, the number increased 27 bp to 2.45 percent from 2.18 percent.
On the other hand, the net NPA (NNPA) reached Rs 1,886.58 crore, compared to Rs 2,173.29 crore in Q3FY20. The ratio reached 0.91 percent, down from the 1.05 percent reported in the third quarter of fiscal year 20.
“During the quarter ended December 31, 2019, the bank recognized the exposure with respect to two entities with a balance of Rs. 960.89 crore as fraud,” the bank said in a statement, without disclosing the names of the entities.
In accordance with RBI regulations, the bank has charged Rs.240.22 crore to the profit and loss account for the quarter ended March 31, 2020 and a total of Rs.480.44 crore during the year ended March 31, 2020, he added.
ICICI Securities analysts had anticipated the exposure of Rs 8,800 crore to the telecommunications sector to cast a shadow over the quality of the bank’s assets. Furthermore, the slowdown in the MFI and commercial vehicle (CV) sectors could further aggravate the bank’s non-performing assets (NPA), they said.
The accountant closed 6% higher at Rs 407.35 each on the BSE, versus a 1% gain on the benchmark S&P BSE Sensex.
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