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MUMBAI
IndusInd Bank posted a consolidated net profit of ₹2,349 crore for Q4 FY24, up 15 per cent on year and 2 per cent on quarter, led by healthy growth in net interest income (NII) and stable margins.
The consolidated results include the financials of wholly-owned subsidiary Bharat Financial Inclusion Ltd and associate company IndusInd Marketing and Financial Services.
“In FY24, the bank achieved two important milestones of completing 30 years of operations and balance sheet crossing ₹5-lakh crore,” MD and CEO Sumant Kathpalia said. The board of the bank recommended a dividend of ₹16.50 per share for FY24.
Advances of the bank grew 18 per cent on year and 5 per cent on quarter to ₹3.4-lakh crore. Disbursements in the vehicle finance business were 4 per cent lower year-on-year and 13 per cent quarter-on-quarter due to the migration of the business to a new core banking system.
However, on an overall basis, the bank is seeing no rationale for loan growth to slow down, including in corporate loans. The bank will continue to maintain retail loans at 55-58 per cent of the portfolio and corporate loans at 42-45 per cent, Kathpalia said in the earnings call.
NII for the quarter grew 15 per cent y-o-y and 2 per cent q-o-q to ₹5,376 crore. Net interest margin (NIM) stood at 4.26 per cent as against 4.29 per cent in the previous quarter and 4.28 per cent in the previous year.
The bank’s margins will remain within the guided range of 4.2-4.3 per cent, Kathpalia said. Yield on assets for the bank rose to 9.85 per cent in Q4 from 9.20 per cent a year ago. In comparison, cost of funds increased to 5.59 per cent from 4.92 per cent.
However, a 24 per cent increase in operating expenses to ₹3,803 crore weighed on the bottom-line. Kathpalia said that the bank is on a “growth path” and is continuously investing in various verticals such as people, technology infrastructure, data centers, distribution and relatively newer businesses such as the mortgage and merchant acquiring segments.
“As long as our financial vectors are between 1.8-2.2 RoA (return on assets) and growth is between 18-22 per cent and we are able to deliver that, there should not be a problem in the opex,” he said adding that the bank will continue to invest for future growth.
Deposit growth and composition
Deposits grew by 14 per cent on year to ₹3.8 lakh-crore led by 18 per cent growth in retail deposits. CASA deposits stood at ₹1.5 lakh-crore, of which current account deposits were ₹46,989 crore and savings account deposits were ₹98,676 crore. CASA deposits comprised 38 per cent of total deposits.
With widening spreads between CASA and term deposits, more customers are moving towards term deposits, Kathpalia said, adding that savings account growth has been strong but current account growth has been weak. As such, the bank is focussing on medium and small corporates to replace the CASA over time and the ratio should move up to 38.5-39 per cent in FY25 and beyond thereafter.
While deposit accretion has been an issue due to tightened liquidity over the last 2-3 years, IndusInd Bank has been able to manage it well and retail deposit growth for the bank should be higher and continue to match asset growth. “We should be growing at 16-19 per cent to match our asset growth ambition,” he said.
On sustained delinquencies in the vehicle portfolio, Kathpalia said the scooter loan business was impacted during the Covid pandemic and has just started picking up which should support asset quality going forward. Credit cost should remain at 110-130 bps for FY25, he added.
Gross NPA ratio improved to 1.92 per cent as of March 31 from 1.98 per cent in the previous year but was flat on quarter. Net NPA ratio at 0.57 per cent was also better than 0.59 per cent a year ago but unchanged sequentially.
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