“It is very difficult to give any forecast because of the uncertainties due to Covid. We have navigated well in a turbulent year. Our collections are healthy. The focus now is on how Covid plays out,” Kathpalia said.
The bank made an extra Rs 600 crore Covid related provision during the quarter above the Rs 996 crore it was carrying in its books as it fortified its balance sheet for any risks emerging in the future.
“The bank is carrying significant buffers outside these provisions as a prudent measure. Our areas of domain expertise such as vehicle finance, micro-finance and diamond finance have witnessed strong disbursements and we expect the growth to become further broad-based in the current financial year,” Kathpalia said.
IndusInd’s net profit tripled year on year led by a 24% fall in provisions even as loan growth at 3% year on year was slower than the banking systems 5.6% growth for the fiscal year.
Consolidated net profit for the quarter ended March 31, 2021 at Rs. 926 crores was up three times as compared to Rs. 315 crores during corresponding quarter of previous year. Total provisions fell 24% to Rs 1,866 crore from Rs 2,440 crore a year ago but were up from Rs 1853 crore reported in December 2020.
Net interest income increased 9% to Rs. 3,535 crores from Rs 3,232 crores a year ago. A almost 100 basis points dip in cost of funds to 4.54% from 5.52% a year ago helped improve profiability even though a Rs 10,000 crore of extra liquidity carried on bank’s book hit margins y 10 to 12 basis points. Net interest margin (NIM) or the difference between the yield a bank earns on loans and that it pays for deposits dipped to 4.13% at the end of quarter from 4.25% a year ago.
The bank’s fee income including those from retail banking improved to Rs 1,780 crore in March 2021 as just about the Rs 1,773 crore seen in the pre-Covid March 2020 quarter.
Retail and loans to small enterprises now make up 57% of the bank’s loan book. Kathpalia said a 7% growth in vehicle loans and 9% growth in micro finance loans, two key segments for the bank show a revival is round the corner.
“Overall we saw a 30% increase in disbursements on vehicle finance. Commercial vehicles saw a 54% growth year on year and we are confident that as things open up and with monsoon expected to be normal, this as well as rural demand will pick up,” Kathpalia said.
Gross NPAs at 2.67% of gross advances in March 2021 as were up from 2.45% a year ago though down from 2.93% reported on a proforma basis, led by upgrades and write offs.
The bank upgraded Rs 1,875 crore of loans and write off Rs 1,350 crore during the quarter.
Total loans restructured amounted to Rs 3,737 crore led by loans to companies about 1.80% of advances.