Tag: IndusInd Bank

IndusInd Bank net falls 34% YoY on higher provisions

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The bank’s pro forma non-performing assets (NPAs) stood at Rs 6,159 crore and it made provisions to the extent of Rs 4,722 crore, or 77%.

IndusInd Bank’s net profit fell 34.4% year on year (YoY) to Rs 853 crore in the December quarter as a result of a 78% jump in provisions to Rs 1,854 crore. The bank also registered interest reversal in some accounts. Its net interest income (NII) increased 11% YoY to Rs 3,406 crore and net interest margin (NIM) fell four basis points (bps) sequentially to 4.12%.

Sumant Kathpalia, MD and CEO, IndusInd Bank, said the lender reversed interest income on bad assets, which remained unrecognised as a result of a September 3, 2020, judicial stay and these reversals were to the tune of Rs 185 crore. “Adjusted for this, NII and PPoP (pre-provision operating profit) growth would have been 17% and 14% YoY, respectively,” he said.

The bank’s pro forma non-performing assets (NPAs) stood at Rs 6,159 crore and it made provisions to the extent of Rs 4,722 crore, or 77%. “We have provided completely for the unsecured business, or the microfinance business, where we think the losses may be a little elevated. Having said that, in the corporate side of the book and the retail side, we do not expect losses,” Kathpalia said.

The bank has approved restructuring for 0.6% of its loan book and the process has been invoked for another 1.2% of its book, consisting largely of corporate loans. It expects another 0.3-0.4% of the book to undergo one-time recast as the window for micro, small and medium enterprises (MSMEs) remains open till March 31, 2021. “Our guidance to the market has always been 2.5-3%. We’ll come much below that target,” Kathpalia said.

Gross NPAs stood at 1.74% of advances as on December 31, 2020, down from 2.21% as on September 30, 2020. The net NPA ratio stood at 0.22% of net advances as on December 31 down from 0.52% on September 30. If the bank had recognised NPAs following income recognition and asset classification (IRAC) norms after August 31, 2020, the pro forma gross NPA ratio would have been 2.93% and the pro forma net NPA ratio would have been 0.7%.

The advances book shrank marginally on a y-o-y basis to Rs 2.07 lakh crore as on December 31, 2020, and total deposits rose 10% YoY to Rs 2.39 lakh crore. Current account savings account (CASA) deposits comprised 40.4% of total deposits as on December 31, 2020, down from 42.4% a year ago.

IndusInd Bank’s shares closed at Rs 846.25 on Friday on the BSE, up 5.44% from their previous close. The results were declared after the close of trade.

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IndusInd Bank Q3 net profit down 34%

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IndusInd Bank reported a 34.4 per cent drop in its standalone net profit in the third quarter of the fiscal to ₹852.76 crore as against ₹1,300.2 crore in the same period a year ago.

For the quarter ended December 31, 2020, its net interest income rose by a robust 10.8 per cent to ₹3,406.1 crore as compared to ₹3,074.02 crore in the same period last fiscal. Net Interest Margin for the quarter was 4.12 per cent.

Other income however, declined to ₹1,705.46 crore in the October to December 2020 compared to ₹1,789.40 crore a year ago. Provisions surged by 77.6 per cent to ₹1,853.52 crore in the third quarter of the fiscal as against Rs ₹1,043.45 crore a year ago.

Gross non performing assets stood at 1.74 per cent and net NPAs amounted to 0.22 per cent as on December 31, 2020 versus 2.18 per cent and 1.05 per cent respectively as on December 31, 2019. Asset quality was stable.

The pro forma gross NPA would have been at 2.93 per cent and the pro forma net NPA after considering provisions allocated would have been 0.70 per cent. The restructuring pursuant to RBI resolution framework stands at 0.60 per cent of advances as at December 31, 2020. The bank improved the Provision Coverage Ratio to 87 per cent as on December 31, 2020 from 53 per cent as on December 31, 2019.

“Loan growth was strong in areas of domain expertise and helped increase our net interest income 11 per cent year on year. The bank has conservatively built strong Provision Cover at 87 per cent resulting in a net NPA of just 0.22 per cent with total provisions (comprising specific, floating, general and standard assets provisions) being 188 per cent of the gross NPA as on December 31, 2020. We now look forward to a more secular growth profile going forward,” said Sumant Kathpalia, Managing Director and CEO, IndusInd Bank.

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IndusInd Bank Q3 net profit down 34%

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IndusInd Bank reported a 34.4 per cent drop in its net profit for the third quarter of the fiscal to ₹852.76 crore, as against ₹1,300.2 crore in the same period a year ago.

For the quarter ended December 31, its net interest income rose by a robust 10.8 per cent to ₹3,406.1 crore compared to ₹3,074.02 crore in the same period last fiscal. Net Interest Margin for the quarter was 4.12 per cent.

Other income however, declined to ₹1,705.46 crore in the October-December quarter, compared to ₹1,789.40 crore a year ago.

Provisions surged by 77.6 per cent to ₹1,853.52 crore in the third quarter of the fiscal as against ₹1,043.45 crore a year ago.

Gross non-performing assets stood at 1.74 per cent and net NPAs amounted to 0.22 per cent as on December 31, versus 2.18 per cent and 1.05 per cent respectively– as on December 31, 2019.

The pro forma gross NPA would have been at 2.93 per cent and the pro forma net NPA after considering provisions allocated would have been 0.70 per cent. The restructuring pursuant to RBI resolution framework stands at 0.60 per cent of advances as at December 31.

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Private lenders report healthy loan growth in Q3

Banking & Finance

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The margin trajectory will remain moderately under pressure, given the continued monetary easing, low lending rates and relatively higher liquidity on bank balance sheets.

Private lenders have reported a sequential improvement in the net advances during the December quarter, according to provisional data released by the banks. While the largest private lender HDFC Bank has shown a 3% growth in the loan book, IndusInd Bank and IDFC First Bank reported over 3% quarter-on-quarter (q-o-q) growth in the advances. Similarly, Yes Bank has shown a 1.3% increase in the net advances during the quarter compared to the September quarter.

An analyst from Emkay Global Financial Services said that banks have reported q-o-q credit growth mainly due to festive pick-up as economic unlocking began. Many lenders reported improvement in the retail loan book during the quarter. IDFC First reported a 11.3% q-o-q increase in its retail loan book during the quarter. Similarly, showing a sign of improvement after its reconstruction, Yes Bank’s gross retail disbursements more than doubled in the December quarter at Rs 7,563 crore (q-o-q).

In a note to its clients, Kotak Institutional Equities has however, said that loan growth recovery of banks will be slower than expectations. “While credit demand is recovering from post-lockdown lows along with approval rates and share of NTC (new-to-credit) originations, we expect loan growth recovery to be slower than expectations of market participants, “ Kotak Institutional Equities said.

Private lenders have also reported strong deposit growth during the December quarter. While HDFC Bank has shown a 19% y-o-y growth in deposits during the December quarter, IndusInd Bank has registered 10.56% y-o-y growth in deposits. Similarly, Federal bank has registered a 12% y-o-y growth in the deposit numbers. Sequentially, While HDFC Bank has registered a 3% deposit growth, IDFC First Bank reported 11% increase in its deposits during the December quarter. Similarly, Yes Bank and IndusInd Bank reported a 7.7% and 5% deposit growth in the December quarter, as compared to September quarter.

Lalitabh Srivastava, assistant vice-president (AVP), research, Sharekhan, said that the low-cost deposit share of private banks is increasing as per provisional data. “So, maybe they are gaining market share, either from public sector banks or cooperative banks. Gaining deposit share was the next goal to achieve for private banks, because they were already doing better on the advances side, ” he added.

Shailendra Kumar, chief investment officer, Narnolia Financial Advisors said that although provisional numbers released by the private lenders were on expected lines, but it will be important to know what happens in the moratorium accounts and the final figures of restructuring.

Kotak Institutional Equities also said that headline asset quality is expected to worsen if the Supreme Court lifts its order that banned banks from marking defaulted loans as non-performing assets (NPAs). The slippages could be meaningfully high in our view, it said. The apex court had earlier directed banks not to recognise fresh NPAs, till further orders in the interest on interest case. A public interest litigation (PIL) was earlier filed in the Supreme Court to waive off interest on interest for borrowers during the moratorium period between March to August 2020.

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Private banks report healthy deposit accretions, sluggish advances growth in Q3, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Small and mid-sized private sector banks have reported a healthy deposit growth in the third quarter, even as they have struggled to grow their loan books, as per exchange filings by three lenders. Despite interest rates being the lowest in over a decade, the pandemic and the resultant economic impact has ensured that loan demand is very low and the system’s credit growth is stuttering at about 6 per cent.

Expending income on deposits which do not fetch income through lending is a cost on banks.

Microlender-turned-universal bank Bandhan Bank was the only one which showed a surge in loan book, which grew 23 per cent on an annual basis to Rs 80,255 crore, while in case of IndusInd Bank and IDFC First Bank, the growth has been marginal, separate exchange filings showed.

IndusInd Bank had seen a shrinking of the loan book in the nine months to September. It increased the loan book by over Rs 6,000 crore during the December quarter to end slightly above the year-ago period’s Rs 2.07 lakh crore, while IDFC First Bank’s book grew by over Rs 3,000 crore during the quarter ended December 2020.

However, from a deposits perspective — it was a dip in deposits during the Yes Bank crisis which led banks to disclose the performance ahead of the quarterly results — there has been growth across the three lenders.

Bandhan Bank reported a 30 per cent increase in deposits compared to the year-ago period, IDFC First Bank’s deposits grew 41 per cent and IndusInd Bank witnessed 11 per cent growth during the quarter.

The share of the low cost current and savings account (CASA) deposits as on December 31, 2020 for IndusInd Bank was at 40.5 per cent, almost at par with the year-ago period, while Bandhan Bank witnessed a healthy rise of 43 per cent.

IDFC First Bank said its retail deposits (including both CASA and term deposits) registered a growth of 100 per cent on a year-on-year basis.

The IDFC First Bank scrip gained 4.16 per cent, Bandhan Bank corrected by 1.46 per cent and IndusInd Bank ended the session almost flat on the BSE on Wednesday, as against a 0.54 per cent dip in the benchmark.



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IDEMIA partners with IndusInd Bank to launch metal credit card, BFSI News, ET BFSI

Banking & Finance

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Metal payment card technology entity IDEMIA, in a partnership with IndusInd Bank, announced the lender’s first metal credit card. The entity said IndusInd Bank, which has named the card as “PIONEER Heritage”, added “Payment cards are no longer a mere payment tool in India but also reflect the lifestyle of the card holder,” IDEMIA quoted “Research shows that buying premium products makes 52% of global customers “feel good, and metal cards are a major differentiator for 58% of the card holders.”

IDEMIA further said “high-quality material, superior style, handcrafted design and artisanal effects,” defined the exclusivity quotient for card holders, whilst adding “Equipped with best-in-class features and privileges across categories like travel, wellness, lifestyle, among others, the all new metal credit card – offers exclusivity to wealth customers of IndusInd Bank by providing them with a superior payment experience powered with innovative technology.”

Amanda Gourbault, Executive Vice President, Financial Institutions, IDEMIA, on the launch of the card said “As the world goes digital, payment cards are arguably the last physical touch-point between the bank and its customers. The significance of metal cards is to promote IndusInd Bank’s brand and serve as a tool to create loyalty for the bank,”

“Our global experience is that Metal cards facilitate Card Holders’ exclusive and premium payment experience and hence the customer loyalty,” Gourbault further added.



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How good is Bajaj Finance’s Single Maturity Scheme?

Personal Finance

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Taking cues from the systematic investment plans (SIPs) of mutual funds, Bajaj Finance launched a new FD product earlier this year — the Systematic Deposit Plan (SDP).

We reviewed the product in January this year (tinyurl.com/SDPBaj). Bajaj Finance has now launched a variant of SDP, with a ‘Single Maturity’ option.

We take a look at whether this new feature makes the cut as a worthy investment.

Recap

The SDP essentially allows a person to make regular investments, a minimum of ₹5,000 every month. Each monthly investment is treated as a separate deposit, with tenures of each deposit being 12-60 months, at the choice of the investor. In addition, investors can opt for the number of monthly deposits, ranging from six to 48.

 

All deposits under SDP are cumulative deposits, implying that the interest will be paid on maturity only. The SDP essentially helps create a laddering effect due to different FDs under SDP maturing on different dates.

The change is that this product introduced in January is now called ‘Monthly Maturity Scheme’. Alongside,the company has launched a new variant, the ‘Single Maturity Scheme’. Here, customers will receive the maturity proceeds of all the FDs created systematically, as a lump sum, in a single day. Under the Single Maturity Scheme, one can deposit for tenures between 24 and 60 months. The number of deposits (beyond the first deposit) one can opt for varies from six additional deposits to 36, depending on the tenure.

Customers opting for a tenure of 24 months (minimum tenure under Single Maturity Scheme) will be required to make six additional deposits under the SDP (after the initial deposit). For SDP of higher tenure, say, 36 months, customers can opt to pay either six or 12 additional deposits. Similarly, for a 48-month tenure, one can opt to pay six, 12 or 24 additional deposits, and for a 60-month tenure, the options available are six, 12, 24 or 36 additional deposits.

The tenure of each deposit (instalment), after the first deposit, will gradually reduce such that all of them mature on a single date. Say, you opt for a single maturity scheme of 36-month tenure and opt for six additional deposits — your first deposit will have a maturity of 36 months. The second deposit will mature in 35 months, and third/fourth/fifth/sixth/seventh deposit will mature in 34/33/32/31/30 months, respectively.

Under this scheme, every deposit will fetch interest, according to the prevailing rate of interest on the date of deposit and for the respective tenure.

Worth it or not?

Post the recent revision in rates, Bajaj Finance offers interest rates of 6.9-7.1 per cent for (cumulative) deposits ranging 12-60 months.

Customers who apply online and senior citizens get an additional interest rate of 0.1 per cent and 0.25 per cent, respectively. The company’s deposits are rated AAA.

While the rates offered by Bajaj Finance are higher than most public sector banks, a few private banks —IndusInd Bank and RBL Bank, for instance — offer rates that are 10-15 basis points (bps) higher than those offered by Bajaj Finance currently. Small finance banks offer 10-25 bps higher rates, across tenures.

That said, investing in SDP, whether single maturity or multiple maturities, may make sense only in a rising-rate scenario.

If the company revises its interest rates at regular intervals, successive instalments will be locked into higher rates.

However, if you want to maximise the interest earned, deciding the number of systematic deposits and the tenure of the instalments beforehand can be a difficult task.

The new variant of SDP — single maturity scheme — can be somewhat similar to a recurring deposit (RD). But the difference is that in an RD the interest rate is constant throughout the tenure (flexi RDs may pay out higher interest on the stepped-up amount). Also, in an RD, you are required to contribute every successive month.

Under the single maturity scheme, you don’t contribute for all the months of the tenure. You can choose the number of months you want to contribute.

In a traditional RD, banks generally charge a penalty —in the form of lowered interest rate —in the event of a delay in or non-payment of an instalment.

No such penalty applies in the case of the SDP. Delaying a month’s SDP instalment only alters the tenure of that deposit (in the case of single maturity scheme) or pushes your maturity date for that instalment further (monthly maturity scheme).

You also have the flexibility to stop investing or restart after a gap with a new ECS (electronic clearing service) mandate.

If you have a steady cash inflow which you wish to keep reinvested, this product could be an option apart from RDs.

Otherwise, it is suitable for those who cannot keep a regular watch on interest rates in the market and the rates offered by different entities.

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