IndusInd Bank has posted moderate 5% growth in the net profit to Rs 985.03 crore for the quarter ended December 2018 (Q3FY2019). The higher provisions mainly impacted the bottomlines of the bank for second straight quarter in Q3FY2019. The bank has made further additional provisions of Rs 255 crore for its exposure to one infrastructure group in addition to Rs 275 crore provided in Q2FY2019.

The asset quality of the bank has remained nearly stable and healthy, while net interest margins (NIM) was also healthy at 3.83% in Q3FY2019. The non-interest income growth of the bank was strong driven by healthy growth for both core fee income as well as treasury income.

Bank has recorded strong 35% growth in the loan book. Bank has strongly expanded network strength adding new 92 branches in Q3FY2019, raising the branch count to 1558 at end December 2018.

Stable asset quality: Bank has continued to maintain the asset quality stable in Q3FY2019. The fresh slippages of advances rose in Q3FY2019, while bank also exhibited improved recoveries and upgradations helping to maintain asset quality. The restructured advance book of the bank was steady in Q3FY2019.

• Fresh slippages for the quarter ended December 2018 were Rs 806 crore, while the deductions stood at Rs 619 crore.
• Gross NPA ratio in the corporate book rose qoq to 1.14%, while in the retail loan book GNPA eased qoq to 1.12% end December 2018 from 1.07% and 1.13% a quarter ago.
• Restructured advances book of the bank was steady on sequential basis at 0.11% of the advances during the quarter under review, which declined from 0.15% at end December 2017.
• Provision coverage ratio dipped sharply to 48.00% at end December 2018.
• Capital adequacy ratio in Q3FY2019 stood at 14.19% .

Business Highlights:

Maintains robust loan growth: Business of the bank increased at accelerated pace of 27% to Rs 348870 crore at end December 2018. The business growth was driven by surge in advances growth at 35% to Rs 173169 crore, while deposits increased 20% to Rs 175701 crore at end December 2018.

Retail loan book growth exhibited strong growth at 28% at Rs 68033 crore end December 2018. Meanwhile, the corporate loan book jumped 39% at Rs 105136 crore at end December 2018.

The retail:corporate mix of the advances book of the bank stood at 39.29 : 60.71 at end December 2018 compared with 41.33 : 58.67 at end December 2017.

Within the retail book, the auto loans segment growth strengthened to 27%, as commercial vehicle loan segment surged 30%, while car loans 20% and two wheelers loans 24% exhibited strong growth in Q3FY2019.

Further, within the retail segment, the personal loans - homes loans continued to record healthy growth at 51% at end December 2018. Credit cards also posted strong growth of 51%, while loan against property increased 9% at end December 2018 over December 2017.

Within the corporate book, the large corporate loans grew 39% , while loans to mid-sized corporate moved up 34% and small corporate 49% at end December 2018.

CASA ratio steady: CA deposits increased 30% to Rs 26526 crore, while SA deposits galloped 18% to Rs 50023 crore at end December 2018. CASA deposits constituted 43.6% of the total deposits in quarter under review against 42.9% a year ago.

Stable NIMs: Bank has recorded steady NIM of 3.83% in Q3FY2019 from 3.84% in Q2FY2019. Bank exhibited 16 bps qoq rise in yield on assets to 9.64%, while cost of funds moved up 17 bps qoq to 5.81% helping to boost NIMs.

Network expansion: Bank has added 92 branches in the quarter ended December 2018 taking the branch count to 1558 branches at end December 2018. Bank has also installed 81 ATMs in Q3FY2019 improving the ATMs strength to 2453 ATMs at end December 2018.

Book value stood at Rs 438.9 per share, while adjusted book value (adjusted for NNPA and 10% of restructured assets) stood at Rs 421.5 per share at end December 2018.

Quarterly Performance:

NII rises on strong NIMs and loan growth: Bank has reported 34% increase in the interest earned at Rs 5763.47 crore, while interest expenses surged 45% to Rs 3475.38 crore in Q3FY2019. Net Interest Income (NII) increased 21% to Rs 2288.09 crore in the quarter ended December 2018.

Healthy core fee income growth, treasury income spurts: The non-interest income of the bank increased 24% to Rs 1468.85 crore. The core fee income continued to increase at healthy pace of 18% to Rs 1266 crore, while trading income jumped 85% to Rs 203 crore in Q3FY2019.

Within the core fee components, the investment banking income jumped 12% to Rs 201 crore, forex income 36% to Rs 275 crore and loan processing fees 14% to Rs 276 crore. The distribution fees improved 5% to Rs 268 crore, while general banking fee rose 30% to Rs 91 crore and the trade and remittance income also moved up 22% to Rs 155 crore in Q3FY2019.

The Net total income increased 22%, yoy, to Rs 3756.94 crore during the quarter ended December 2018.

Expense ratio improves: The employee cost declined 2% to Rs 452.05 crore, while the other operating expenses moved up 24% to Rs 1187.93 crore, pushing up the operating expenses by 16% to Rs 1639.98 crore.

The expense ratio improved sharply to 43.7% in Q3FY2019 compared with 46.0% in Q3FY2018, allowing the operating profit to surge 27% to Rs 2116.96 crore.

Provisions jump: The provisions and contingencies surged 157% to Rs 606.68 crore compared to Rs 236.16 crore in Q3FY2018. The credit cost inched up to 18 bps in Q3FY2019 compared with 12 bps in Q2FY2019 and 15 bps in Q3FY2018.

The tax rate was flat at 34.8% in Q3FY2019 compared with Q3FY2018, allowing the net profit to improve 5% to Rs 985.03 crore in the quarter ended December 2018.

YTD Financial Performance:

For the nine-months ended December 2018 (9MFY2019), the bank has posted 11% increase in net profit to Rs 2941 crore. The net interest income improved 20% to Rs 6613.8 crore, while non-interest income advanced 15% to Rs 4087.73 crore in 9MFY2019. The operating expenses increased 13% to Rs 4681 crore, while provision and contingencies jumped 84% to Rs 1546.96 crore. The expense ratio improved 215 bps to 43.7% in 9MFY2019 compared to 45.9% in 9MFY2018. The profit before tax improved 11% to Rs 4473.57 crore in 9MFY2019. After considering 34.3% of effective tax rate, the net profit increased 11% to Rs 2941 crore in 9MFY2019.

Indusind Bank: Financial Results