Private sector lender IndusInd Bank’s consolidated net profit jumped 50% to Rs 1,242 crore in the October-December (Q3) quarter of FY22, helped by healthy net interest income and lower provisions. In the corresponding period last year, the bank reported a net profit of Rs 830 crore. The bank’s standalone net profit for the period increased by 36% to Rs 1,161 crore.
The lender’s net interest income, the difference between interest earned and interest spent, rose 11% to Rs 3,794 crore in the quarter under review, while net interest margin, a measure of profitability stood at 4.10%, up 3 basis points sequentially.
Other revenue increased by 14% to Rs1,877 crore in Q3FY22 from Rs1,646 crore while core fee revenue increased by 9% YoY to Rs1,519 crore from Rs1,389 crore rupees in the corresponding quarter of the previous year.
The lender’s provisions and contingencies fell by 11% to Rs 1,654 crore in Q3FY22 from Rs 1,853.52 crore a year ago. In the previous quarter, the lender had provisions amounting to Rs 1,703.36 crore.
The lender’s asset quality improved 29 basis points sequentially, with the gross non-performing assets (NPA) ratio standing at 2.48% at the end of the December quarter from 2.77% at the end of the December quarter. end of September term. Similarly, the net NPA ratio improved to 0.71% from 0.8%.
The “third wave” of Covid-19 broke out at the end of December, which had a slight impact on banking operations and the level of uncertainty is currently reducing. In view of this, the bank has made regulatory, floating, counter-cyclical and/or contingent provisions, bringing the total amount of these provisions to Rs 3,740 crore as of December 31, 2021, including an amount of Rs 1,365 crore in respect of of the borrowers’ accounts have been restructured in accordance with the Covid-19 stress resolution framework, the bank said.
Under the Reserve Bank of India’s second covid restructuring plan, the bank restructured loans worth Rs 2,873 crore.
The lender’s advances rose 10% year-on-year (YoY) and 4% sequentially to reach 2.28 trillion rupees at the end of the December quarter, from 2.07 trillion rupees a year ago. Deposits, on the other hand, grew by 19% year-on-year to Rs 2.84 trillion, with low-cost deposits accounting for 42% of total deposits.
In November 2021, it emerged after a whistleblower complaint that a subsidiary of the bank, Bharat Financial Inclusion, had disbursed nearly 84,000 loans without customer consent in May 2021 due to a problem technical and the bank had stated that it would carry out an independent review to establish responsibility for the whole process.
Bank management, in a post-results call on Saturday, said the bank conducted an external and internal review of the microfinance portfolio after the whistleblower complaint and that the outcome of the internal and external review of the microfinance portfolio is in line with management. expectations. But, a final report from the external consulting firm is awaited.
“Our internal review informed us that there was an MFI product, which offered cash support to clients who were impacted by the second wave of covid after settling existing dues. However, it was observed that cash disbursements and arrears in repayments were occurring on the same day, which was a procedural flaw,” said Sumant Kathpalia, MD&CEO, IndusInd Bank.
The bank’s management said they continue to believe that the product, which was launched, was approved by the bank. However, there may have been a process deviation.
“There is staff accountability that needs to be addressed for the process deviation that we found. But there will be no financial loss for the bank,” Kathpalia said.
The standard loan outstanding under the product was Rs 179 crore and it was fully provisioned. Management also assessed a matter of possible impact on asset classification, revenue recognition and provisioning. Further assessment also included factors that could lead to regulatory issues and they have already been adequately addressed, Kathpalia added.
All MFI products require loan disbursement with biometric and OTP consent from the client. It is confirmed that the disbursement of the loans, without the client’s consent being recorded, was due to a system problem. Standard loans outstanding out of the 84,000 loans are around Rs 7 crore and have been fully provisioned, Kathpalia added.