IndusInd Bank Q4 profit plunges 62% to Rs 360 cr; lender's Rs 3,004-cr exposure to IL&FS takes toll

Mumbai: IndusInd Bank on Wednesday reported a 62 percent fall in net profit at Rs 360 crore for the March quarter 2018-19 due to higher provisioning for loans extended to IL&FS. Its profit in the year-ago period stood at Rs 953 crore. The private sector lender has a total exposure of Rs 3,004 crore to IL&FS Group, of which Rs 2,000 crore is to the holding company and Rs 1,004 crore to operating companies/ special purpose vehicles. The entire exposure to IL&FS was classified as a non-performing asset (NPA) in the fourth quarter. [caption id=“attachment_6013191” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] “While the bank witnessed robust growth in its top line as well as in operating profits, aggressive one-time provisioning for IL&FS depressed the bottom line,” the bank’s MD and CEO Romesh Sobti told reporters. During the quarter, it made a provisioning of Rs 1,253 crore towards IL&FS Group. For the full year, provisions stood at Rs 1,803 crore. It has a 70 percent provisioning for exposure to the holding company and a 25 percent to the SPVs. Sobti said the bank has made a sufficient amount of provisioning for the exposure to the IL&FS Group. “We have good reason to believe and there are indications in the market that there could be 90-100 percent recovery on this particular exposure,” he said. Net interest margin (NIM) stood at 3.59 percent as against 3.97 percent in the year-ago period. Net interest income (NII) grew 11 percent to Rs 2,232 crore as against Rs 2,008 crore. Core fee income rose 27 percent to Rs 1,419 crore from Rs 1,113 crore in the same quarter last year. Gross NPAs stood at 2.10 percent as against 1.17 percent, while net NPAs were 1.21 percent compared to 0.51 percent. The bank’s special mention accounts-2 (SMA2) exposure was Rs 641 crore as at March-end 2019. Its advances and deposits grew 29 percent each to Rs 1,86,394 crore and Rs 1,94,868 crore as on 31 March, 2019. It is looking at a loan growth of over 25 percent in the current financial year. The announcement of results was delayed as the bank was waiting for final approval from National Company Law Tribunal (NCLT) for its merger with microfinance company Bharat Financial, Sobti said. The proposal has been approved by the RBI, CCI, and SEBI. “We have got the approval of RBI, CCI, SEBI and we had, therefore, a reason to believe that it would be administratively convenient if we declare the joint results as it (final NCLT approval) was around the corner,” Sobti said. He said NCLT hearing is in the final stages and the orders have been reserved, but the court is on vacation. He expects the final orders to come once the tribunal resumes. The bank’s scrip settled at Rs 1,517.55 apiece, up 4.84 percent, on the BSE.