IndusInd Bank ‘s third quarter earnings beat analysts’ expectations on
Tuesday but higher provisions and tax expenses limited profit growth. Net profit increased 29.9 percent to Rs 581 crore in December quarter compared to Rs 447.2 crore in a year-ago period, boosted by other income, operating profit and net interest income.
Net interest income, the difference between interest earned and interest expended, grew by 36.2 percent to Rs 1,173.4 crore from Rs 861.37 crore year-on-year, the private sector lender said in its filing.
Profit was estimated to grow 23.4 percent and net interest income 30.5 percent during the quarter, according to average of estimates of analysts polled by CNBC-TV18.
“Globally as well as in the domestic market, growth continues to be weak. But against all odds, the bank has kept faith and shown sustained progress across all vectors,” said Romesh Sobti, MD & CEO, IndusInd Bank.
Strong loan growth boosted net interest income. Advances increased 29 percent on yearly basis to Rs 82,167 crore while deposits climbed 25 percent to Rs 86,423 crore in quarter gone by.
Net interest margin also improved to 3.91 percent in December quarter from 3.88 percent in preceding quarter and 3.67 percent in year-ago period.
Other income (non-interest income) rose by 29.3 percent year-on-year to Rs 839 crore and operating profit increased 37.1 percent to Rs 1,061 crore in quarter gone by. The bank said core fee income grew by 30 percent to Rs 725.9 crore during same period.
Provisions remained high during the quarter, rising 80.6 percent on yearly basis and 12 percent on sequential basis to Rs 177 crore in quarter ended December 2015.
Tax expenses too were higher, up 32.5 percent to Rs 302.9 crore during the quarter from Rs 228.6 crore in same quarter last fiscal.
Asset quality more or less remained stable with net non-performing assets rose to 0.33 percent in October-December quarter from 0.31 percent in September quarter and 0.32 percent in corresponding quarter of last fiscal. Gross NPA increased 5 basis points quarter-on-quarter to 0.82 percent but declined 23 basis points on yearly basis.
In absolute terms, net NPA climbed 13.5 percent quarter-on-quarter and 35.6 percent year-on-year to Rs 273.3 crore during the quarter. Net NPA stood at Rs 681.1 crore for the quarter, increased 13.1 percent compared to preceding quarter and 1.25 percent over a year-ago period.
At 14:35 hours IST, the scrip of IndusInd Bank was quoting at Rs 912.25, down Rs 25.35, or 2.70 percent due to higher provisions.
Commenting on the results, Ravikant Bhat of IDBI Capital told CNBC-TV18 that the bank has been consistently underperforming the guidance they were giving and one particular quarter of spike does not imply that it is going to be a trend.
On the sequential increase in gross non-performing-asset (NPA), Kajal Gandhi of ICICI Direct said that it is not alarming as the number is still below 1 percent