IndusInd Bank's profit increase to Rs 661 crore after end of June quarter

MUMBAI: IndusInd Bank’s net profit in the quarter ended June 2016 increased 26% to Rs 661 crore or Rs 10.64 per share compared to Rs 525 crore or Rs 9.74 per share a year earlier riding on strong demand for loans even as the private sector lender reported a slight increase in non performing assets (NPAs).

The increase in profit was led by a 30% growth in advances on the back of a fast growth in loans to individuals and also as working capital demand for loans from sectors like cement, renewable energy and roads, chief executive officer (CEO) Romesh Sobti said.

Gross NPA as a percentage of total loans increased to 0.91% up from 0.79% a year earlier mainly because a couple of restructured loans slipped into NPAs, Sobti said.

The bank had to also set aside Rs 35 crore on provision for loans given to the Food Corporation of India (FCI) after Reserve Bank of India (RBI) earlier this year told banks to set aside money after discovering that food grain supposed to have been bought with bank funds had vanished from Punjab government warehouses.

As a results total bank provisions increased to Rs 230 crore in the quarter ended June from Rs 123 crore a year earlier and even up from Rs 214 crore in the quarter ended March 2016.

Net interest margin or the difference between the yield the bank earned on loans and that it paid on deposits improved to 3.97% from 3.68% a year earlier because of the fast pace of growth in retail loans and as the bank’s fixed rate loans which are mainly vehicle loans continued to yield a high rate of interest even though its cost of funds dropped. Around 31% of IndusInd’s loans are vehicle loans.