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Mumbai Private sector lender IndusInd Bank on Monday reported a net profit of ₹Rs 301.84 million for the three months to March, a decrease of 16% year-on-year (year-on-year), due to higher provisions.
The bank’s total provisions increased 56% year-on-year to ₹2,440 crore in the March quarter. His earnings were less than ₹Rs 412.8 million estimated by a Bloomberg survey of 13 analysts.
Your net interest income or the difference between interest earned and spent stood at ₹3,231.19 crore, 44.74% more than in the same period last year. IndusInd Bank’s net interest margin (NIM), a measure of its profitability, was 4.25% in the fourth quarter of fiscal year 20, an increase of 10 basis points (bp) from the third quarter of fiscal year 20 and an increase of 66 basis points from the fourth quarter of the previous year.
In a call to reporters, Sumant Kathpalia, the new chief executive, said the bank has done a situation analysis of covid-19 and a full portfolio analysis on the corporate and retail side of its business.
“We have taken different scenarios. For a mild to moderate scenario, we have considered that 50% of the country opens in mid-May or the third week of May, the balance of 25% opens between the first and second week of June and the balance of 25% in the first week of July, “said Kathpalia.
In such a scenario, the bank will not see an increase of more than 80 bp in its gross non-productive assets (NPA) and 50 bp in the cost of credit because.
The bank’s gross bad debt ratio, or its bad loans expressed as a percentage of total loans, increased 35 bps on a year-over-year basis to 2.45% in the fourth quarter of fiscal year 20. However, the net interest rate of bad loans was 30 bp YoY lower due to an increase in provisions. Its provision coverage ratio (PCR) increased to 63.34% in March 2020 from 43.04% in March 2019.
IndusInd Bank said in a statement that there is a high level of uncertainty about the duration of the blockade and the time required for things to normalize. In this context, based on an internal evaluation, the bank has made a countercyclical buffer or a floating provision for ₹260 million rupees.
Apart from that, he has also reserved ₹Rs 23 million during the quarter due to the three-month moratorium on borrowers. The RBI has ordered banks to make provisions for 10% of the loan pending moratorium in two tranches of 5% each in the quarter of March and June.
“In the retail sector, in March the collections were over 95% in all our portfolios and in the month of April we are educating our clients to obtain the quotas and we are also seeing very, very healthy results in April. Clients are willing to pay because they understand that they will have to pay additional interest on the portfolio, “said Kathpalia.
Kathpalia added that the bank has contacted its corporate clients. “We are seeing that very few clients return to us. It’s the first days and we still have to look, “he said.
The total progress of the private sector lender was ₹2.06 billion, 10.94% more than on March 31, 2019 and its deposits were at ₹2.02 trillion in the fourth quarter of fiscal year 2016, 3.67% more year-over-year.
“Any prediction of loan growth at this time will be incorrect. In some ways, I think we are all in this situation to refine our balance sheet and make sure that our collections are on track and that our portfolio remains an asset and we don’t see high delinquencies, “said Kathpalia.
On Monday, IndusInd Bank shares rose 6.33% to close at ₹407.35 per share, while the benchmark Sensex index gained 1.33% to close at 31,743.08 points.
