IndusInd Bank Q4 Results: Surge In Investment Income Boosts Profit By 15%
Net interest income of the bank was up 15.1% year-on-year at Rs 5,377 crore for the quarter, as against Rs 4,669 crore over the same period last year.
IndusInd Bank Ltd's consolidated net profit rose 14.9% year-on-year in the quarter-ended March to Rs 2,349 crore on account of higher income from investments.
Analysts polled by Bloomberg had pegged the bottom line at Rs 2,402 crore for the quarter.
In the quarter under review, income from investments rose 27% year-on-year to Rs 1,653 crore. Other income, too, grew 16.4% year-on-year to Rs 2,508 crore.
Other income includes commission income from non-fund based banking activities, fees, earnings from foreign exchange and derivative transactions, profit and loss (including revaluation) from investments and recoveries from accounts previously written off.
Net interest income, or core income, was up 15.1% year-on-year at Rs 5,377 crore for the quarter, as against Rs 4,669 crore over the same period last year.
IndusInd Bank Q4 FY24 Key Highlights
Net interest income up 15% at Rs 5,377 crore year-on-year.
Net profit up 14.9% at Rs 2,349 crore vs Rs 2,043 crore (Bloomberg estimate: Rs 2,402 crore) (YoY).
Gross NPA flat at 1.92% (QoQ).
Net NPA flat at 0.57% (QoQ).
Asset quality remained stable, with gross non-performing asset ratio at 1.92% on a sequential basis. Net NPA ratio, too, remained flat at 0.57% in this quarter.
The bank's net interest margin—a key profitability indicator—stood at 4.26% in the reporting quarter, down 3 basis points sequentially, as compared with 4.29%.
Sumant Kathpalia, managing director and chief executive officer of IndusInd Bank, told reporters in a post-earnings press conference that the bank is comfortable about maintaining net interest margin between 4.2-4.3%.
For the quarter-ended March, the bank's operating expenses rose 24% year-on-year to Rs 3,803 crore. Of this, the employee costs increased 22.2% year-on-year to Rs 1,410 crore and other operating expenses rose 25% to Rs 2,393 crore on a yearly basis.
The bank is focused on making required investments in personnel and technology infrastructure to maintain growth of 18-22%, Kathpalia said.
"We believe in today's world, (IT) systems cannot be down. You have to create online real-time system to match capabilities, and we continue to invest going forward," Kathpalia added.
"Digital is here to stay. Relationships belong to a branch, and transactions belong to digital." IndusInd Bank has spent 8-10% of its total cost to income, that is operating expense out of the net interest revenue and other operating income, he said.
The bank's deposits grew by 14% year-on-year to Rs 3.84 lakh crore, as compared with Rs 3.36 lakh crore. "Deposits have been a issue across banks, with the liquidity remaining tight over the last 2-3 quarters. We have been able to manage well... We believe that we should be growing at 16-19% to match our asset growth ambitions of 18-22%," Kathpalia said.
The bank reported a CASA ratio at 38%, as on March 31.
During the quarter under review, CASA deposits increased to Rs 1.45 lakh crore, with current account deposits at Rs 46,989 crore and savings account deposits at Rs 98,676 crore. "Going forward, our savings account is expected to continue to grow healthy. But, on current account deposits, there is a struggle because the large corporates where we don't have more than 10% lending gets impacted," Kathpalia said.
He expects CASA ratio to improve to 39% in FY25.
Total advances were up 18% year-on-year to Rs 3.43 lakh crore, as compared with Rs 2.89 lakh crore.
Provisions and contingencies for the quarter was at Rs 3,885 crore, as compared with Rs 4,487 crore for the corresponding quarter of the previous year, down by 13%.
IndusInd Bank is keen on expanding its branch network to over 3,500 branches in the next two years, from its current network of 2,987 branches, Kathpalia said.
The capital adequacy ratio for the quarter stood at 17.23%, as compared with 17.86% in the previous quarter. Of this, the CET 1 ratio stood at 15.82%.
"We matured our AT-1 bonds worth Rs 1,490 crore this quarter. That would have been a 40 bps impact, but our CET has fallen by 20 bps. This is because our weighted average on assets have reduced and capital adequacy has improved in that business. We are very cautious about how we use capital, and that's why we do only 'AA' rated paper and above," Kathpalia said.
IndusInd Bank's board recommended a dividend of Rs 16.50 per share.
Shares of IndusInd Bank closed 1.44% higher at Rs 1,495.95 apiece on Thursday, as compared with a 0.66% advance in the benchmark BSE Sensex. The results were announced after market hours.