IndusInd Bank misses estimates, post 5% rise in Q2FY19 PAT; doubles provisions despite stable gross NPA

IndusInd Bank missed analysts estimate during the second quarter ended September 2018 result (Q2FY19). The bank has posted a net profit of Rs 920 crores as against Rs 880 crores in the corresponding quarter of the previous year, showing a growth of 5%. Net Profit for the quarter excluding one-off contingent provision is Rs 1,096 crores, showing a growth of 25% year on year. A Bloomberg poll of analysts had predicted IndusInd Bank’s PAT at Rs 1,100 crore.

Meanwhile, net interest income (NII) for the quarter was at Rs.2,203 crores as against Rs 1,821 crores in the corresponding quarter of the previous year. This means IndusInd registered a robust growth of 21%.

Moreover, operating profit for Q2FY19, stood at Rs 1,992 crores higher by 22% as against Rs 1,634 crores a year ago same period.

Romesh Sobti, MD & CEO, IndusInd Bank said, "Like past quarters, this quarter too the Bank has maintained its trajectory of stable performance, driven by a strong focus on value creation through risk mitigation and strict adherence of prudent banking. We are happy to post yet another consistent quarter."

Interestingly, IndusInd Bank posted heavy provisions against gross NPA which were still slightly stable compared to previous quarters.

Provisions of IndusInd came in at Rs 590.27 crore in Q2FY19, which was nearly doubled from Rs 293.75 crore in Q2FY18, and up by 68.64% as against Rs 350.01 crore in Q1FY19.

In value terms, IndusInd's gross NPA stood at Rs 1,781.36 crore - increasing by 32.41% from previous Rs 1,345.28 crore in Q2FY18. The current gross NPA was sequentially above by 2.34% from Rs 1,740.62 crore in Q1FY19.

However, in percentage terms gross NPA of the bank was at 1.09% in Q2FY19 versus 1.15% in Q1FY19 and 1.08% in Q2FY18.

The bank's credit Cost fell to 12 bps (basis point on Advances) in current quarter as against 17 bps (basis point on Advances) in corresponding quarter of the previous year.

Key highlights of half year ended September 2018 performance given below.

• Net Interest Income (NII) for the half year ended September 30, 2018 was Rs. 4,326 crores as against Rs. 3,595 crores in the corresponding period of the previous year, registering a robust growth of 20 %.
• Non-Interest income was at Rs. 2,619 crores as against Rs. 2,355 crores in the corresponding period of the previous year, a growth of 11 %.
• Core fee income was Rs. 2,383 crores as against Rs. 1,987 crores in the corresponding period of the previous year, marking a growth of 20 %.
• Operating Profit for the half year ended September 30, 2018 was Rs. 3,904 crores as against Rs. 3,222 crores in the corresponding period of the previous year, a growth of 21 %.
• Net Profit for the half year ended September 30, 2018 was Rs. 1,956 crores as against Rs. 1,717 crores in the corresponding period of the previous year, showing a growth of 14 %.
• Net profit for the half year ended September 30, 2018 excluding one off contingent provision is Rs.2,132 crores showing growth of 24% year on year.
• Net Interest Margin (NIM) for the half year ended September 30, 2018 was 3.88 % as against 4.00 % in the corresponding period of the previous year.
• CASA (Current Accounts- Savings Accounts) Ratio improved to 44% against 42% and Saving deposit grew by 27% Y-o-Y from Rs.40,157 crores as at September 30, 2017 to Rs.51,106 crores as at September 30 ,2018.
• Advances as at September 30, 2018 were at Rs.1,63,144 crores as compared to Rs. 1,23,181 crores in the corresponding period of the previous year, recording a growth of 32%.
• Deposits as at September 30, 2018 were at Rs. 1,68,219 crores as compared to Rs. 1,41,441 crores in the corresponding period of the previous year, up by 19%. Total Business at Rs. 3,31,363 crores.
• Credit Cost improved to 24 bps (basis point on Advances) in half year ended September 30, 2018 as against 33 bps (basis point on Advances) in corresponding period of the previous year.
• Increase in network to 1466 Branches and 2372 ATMs as on September 30, 2018 as against 1250 Branches and 2146 ATMs as on September 30, 2017.

After the result announcement, IndusInd Bank share price was trading at Rs 1,626.25 per piece up by Rs 25.10 or 1.52%.