IndusInd Bank Q2 Results: A Net Loss of Rs 436 Crore

IndusInd Bank Ltd. reported a net loss of Rs 436 crore on a consolidated basis for the September quarter, compared with a profit of Rs 604 crore in the previous three months. The bank’s net interest income fell 5% to Rs 4,409 crore from Rs 4,640 crore in the previous quarter.

Asset Quality Improvement

Despite the net loss, the bank’s asset quality saw a slight improvement. The ratio of gross non-performing assets (NPAs) fell to 3.60% from 3.64% in the previous quarter, while the net NPA ratio came down to 1.04% from 1.12%.

The gross NPA fell four basis points to 3.60% from 3.64%, and the net NPA fell eight basis points to 1.04% from 1.12%. However, provisions rose 50% to Rs 2,631 crore from Rs 1,760 crore, which had a significant impact on the bank’s profitability.

Microfinance Provisions and Write-Offs

The bank’s microfinance provisions rose Rs 872 crore on a sequential basis, and the bank wrote off bad loans worth Rs 1,940 crore in the quarter under review. Managing director and chief operating officer Rajiv Anand said that the bank accelerated write-offs as well as increased provisions on microfinance as a prudent measure.

“Our asset quality trends have been stable in all core businesses except in microfinance wherein industry is facing cyclical pressures,” Anand said in a press release.

Return on Assets and Equity

IndusInd Bank registered a negative return on assets, which fell to -0.33%, down 78 basis points on a sequential basis. The return on equity also turned negative, falling 639 basis points from the previous quarter.

Advances and Deposits

Advances fell 2% on the quarter to Rs 3.25 lakh crore, while total deposits also saw a 2% decline over the same period to Rs 3.89 lakh crore as on Sept. 30.

The company’s net interest margin fell 14 basis points to 3.34% for the September quarter compared to the previous three months. The CASA ratio, on a sequential basis, remained flat at 31%.

Outlook and Future Plans

In a post-earnings media call, the bank’s chief financial officer Viral Damania explained that the NII fell due to the provisions in the lender’s microfinance portfolio. He added that the bank has tightened underwriting and controls on microfinance and anticipates growth to normalize in up to six months.

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Conclusion

IndusInd Bank’s Q2 results were impacted by the provisions and write-offs in the microfinance portfolio. However, the bank’s asset quality has shown improvement, and the management is taking steps to tighten underwriting and controls on microfinance. Investors should keep a close eye on the bank’s future developments and investing in the Indian stock market requires a thorough understanding of the market trends and company-specific news.