Private sector lender IndusInd Bank on Friday said that elections and the heatwave across the country led to slow disbursements in the June quarter. The bank which also saw its asset quality worsen sequentially, said it expects improvements in the September quarter.
“It was a challenging quarter. Collections and cautious disbursements were the key focus during the quarter given the external disturbances,” said Sumant Kathpalia, MD & CEO, IndusInd Bank. “We aim to achieve credit costs between 110 bps to 130 bps given that a seasonally weak and turbulent quarter is behind us. Quarter 1 is generally seasonally weak with added disturbances from external factors. The disbursements are already picking up and we remain committed towards 18-23% lending growth.”
Asset quality metrics deteriorated sequentially. The gross non-performing asset ratio for the June quarter was at 2.02% versus 1.92% in the quarter ending March 2024. GNPA ratio was at 1.94% a year ago. Net NPA for the quarter 0.60%.
The rise in NPA came from segments such as microfinance (5.16%), cards (3.07%), loans against property (3.14%) and commercial vehicles (1.07%). Fresh slippages or the formation of new bad loans was at Rs 1,536 crore, almost Rs 1,488 crore came from the consumer book.
Provisions other than tax and contingencies rose to Rs 1,050 crore, as against Rs 992 crore during the same quarter a year ago.
The bank grew its total loans by 15% on year to Rs 3.48 lakh crore. It grew only 1% sequentially as loan growth in the microfinance book fell by more than 5% while growth in credit cards was almost flat. Corporate loans were up 12.8% on year to Rs 1.57 lakh crore.
“The disbursements were lower due to the elections and the heatwave,” Kathpalia said. “We see that the rural areas are still coming out from the disturbances faced during Covid. We are seeing improvements and we should see a better quarter 2.”
The lender reported a flat 2% on year rise in its June quarter net profit at Rs 2,171 crore as business slowed due to seasonally weak quarter. The lender had earned a net profit of Rs 2,124 crore in the year-ago period. Analysts tracked by Bloomberg had pegged net profit of Rs 2,358.6 crore.
The net interest income – the difference between interest earned and paid, rose 11.1% to Rs 5,408 crore. Net interest margin for the June quarter came in at 4.25%.
Total deposits for the bank was up 15% on year to Rs 3.98 lakh crore. The ratio of low cost current account savings accounts deposits stood at 37% as of June 30.
“We grew our assets and liabilities by 15%, and we will continue to grow our assets in line with our liabilities growth, with stable funding growth,” Kathpalia said.
