Updated 19:48 IST, July 26th 2024
IndusInd Bank’s net profit stands at Rs 2152 crore, witnessing 1.3% growth YoY
IndusInd Bank's first-quarter earnings fell short of market expectations due to slower loan growth and a slight reduction in lending margins.
Q1 profit fallen: IndusInd Bank's first-quarter earnings fell short of market expectations due to slower loan growth and a slight reduction in lending margins. The private sector lender reported a net profit of Rs 2152 crore ($257.1 million) for the quarter ending June 30, marking a modest 1.3 per cent increase from the previous year. Analysts had forecasted a higher profit of Rs 2333 crore.
The bank's net interest income, the key measure of earnings from core lending activities, increased by 11 per cent to Rs 5408 crore. However, this was below the anticipated Rs 5554 crore, as per analyst estimates.
Indian banks have been tussling with strong loan demand fueled by solid economic growth and rising urban consumption. This high demand has put pressure on banks to either accelerate deposit collection or scale back loan growth to protect their profit margins. IndusInd Bank’s net loans and deposits each grew by 15 per cent during the quarter, a deceleration from the 18 per cent growth in the previous quarter and 22 per cent growth a year earlier.
The net interest margin (NIM), which reflects the difference between interest income and interest expenses, narrowed slightly to 4.25 per cent from 4.26 per cent in the previous quarter and 4.29 per cent a year ago. This contraction aligns with similar trends reported by other private lenders, such as Kotak Mahindra Bank and Yes Bank.
Provisions for potential bad loans increased by approximately 6 per cent to Rs 1050 crore compared to the same period last year. This rise in provisions was also seen in Axis Bank’s recent earnings report, which highlighted a smaller-than-expected profit due to higher provisions.
IndusInd Bank’s asset quality showed some decline, with the gross non-performing assets (NPA) ratio rising to 2.02 per cent at the end of June from 1.92 per cent three months earlier. Despite these financial challenges, IndusInd Bank's shares closed 1.8 per cent higher in trading before the results were announced.
(with Reuters input)
Published 17:15 IST, July 26th 2024