IndusInd Bank Q1 net up 64% to Rs 1,603 cr on surge in net interest income

IndusInd Bank on Wednesday reported a 64.4 per cent year-on-year rise in its standalone net profit to Rs 1,603.29 crore during Q1FY23, led by a healthy increase in net interest income.

The private sector lender had reported a profit after tax of Rs 974.95 crore in the first quarter of the previous financial year. Sequentially, IndusInd Bank’s net profit rose 17.8 per cent from Rs 1,361.37 crore in January-March.

During the quarter gone by, the private bank’s net interest income registered 16 per cent YoY growth to Rs 4,215 crore. The net interest income -- the difference between the interest earned and interest expended -- rose 4 per cent sequentially.

IndusInd Bank’s net interest margin clocked in at 4.21 per cent for the period under review, against 4.06 per cent a year ago, and 4.20 per cent in January-March.

In April-June, the bank’s other income was at Rs 932 crore, 12 per cent higher than Rs 723 crore a year ago. Core fees grew 47 per cent YoY to Rs 786 crore, from Rs 214 crore a year ago. As on June 30, IndusInd Bank’s deposits were at Rs 3.02 trillion, 13 per cent higher than Rs 2,67 trillion a year ago.

Current Account Savings Account (CASA) deposits, which are low-cost deposits, rose to Rs 1.30 trillion (as on June 30), with the share of current account deposits at Rs 35,265 crore and that for savings accounts at Rs 95,243 crore.

CASA deposits comprised 43 per cent of total deposits as on June 30, the bank said. The bank’s advances stood at Rs 2.47 trillion, 18 per cent higher than Rs 2.10 trillion a year ago.

On the bank’s guidance for 4.15-4.25 per cent net interest margin, Managing Director and Chief Executive Officer Sumant Kathpalia said in an earnings call that the bank was confident of delivering on that range for the year, even as deposit rates are on the rise amid the Reserve Bank of India’s monetary tightening cycle.

“Our asset mix is such that we should be able to manage the NIM,” he said.

On the credit front, Kathpalia said that while the bank’s guidance is for a 16-18 per cent compound annual growth rate per year (CAGR), the bank is aiming for a 20 per cent CAGR in the current year, so as to “catch up” from 12 per cent in the previous year.

IndusInd Bank sees opportunities from the RBI’s recent relaxations on non-resident external account deposits and is trying to garner more NRE deposits, Kathpalia said.

The RBI said that beginning July 30, banks do not have to maintain CRR (cash reserve ratio) and SLR (statutory liquidity ratio) on incremental deposits flowing into FCNRB (foreign currency non-resident bank) and NRE deposits. The relaxation shall be applicable for deposits mobilised until November 4.

“We don’t give numbers (on NRE deposits) we are assessing the market and we should be able to get it,” Kathpalia said. “We have a large FX book and can convert to local currency with the swap cost, and it will still be cheaper than what we get in the domestic market. Right now, we believe that we have the right rates -- our rates will be 50-75 bps higher than the market and that’s where we will be.”

On the asset quality front, IndusInd Bank’s gross non-performing asset ratio was at 2.35 per cent as on June 30, lower than 2.88 per cent a year ago but higher than 2.27 per cent a quarter ago.

The net NPA ratio was at 0.67 per cent as on June 30 versus 0.84 per cent a year ago and 0.64 per cent as on March 31. As on June 30, IndusInd Bank’s provision coverage ratio was at 72 per cent, while the Basel III Capital Adequacy Ratio stood at 18.14 per cent.