IndusInd Bank Q2 net profit halves to Rs663cr on higher provisioning

IndusInd Bank reported 1.64% lower revenues for the quarter ended Sep-20 at Rs8,732cr.

Oct 30, 2020 05:10 IST India Infoline News Service

IndusInd Bank
IndusInd Bank reported 1.64% lower revenues for the quarter ended Sep-20 at Rs8,732cr. Operating profit reported on a consolidated basis showed growth of 8.71% at Rs2,852cr. However, the Net profit figure fell sharply yoy to Rs663cr, more than halving over the year.

This sharp fall in net profits was largely on account of the provisioning for doubtful debts and COVID losses in the Sep-20 quarter higher by over Rs1,200cr at Rs.1,965cr in the Sep-20 quarter. This was solely responsible for the sharp fall in the net profits

The impact was visible on the margins too. Operating margins were up by over 300 bps at 32.66% while the net profit margins more than halved to 7.59% on account of the Rs1,965cr provisions made in the quarter; almost thrice the provisions made in the Sep-19 quarter.

Here are the financial highlights

IndusInd Bank
Rs in Crore Sep-20 Sep-19 YOY Jun-20 QOQ
Total Income 8,732 8,878 -1.64% 8,682 0.57%
Operating Profit 2,852 2,623 8.71% 2,923 -2.42%
Net Profit 663 1,401 -52.67% 510 29.93%
Diluted EPS 9.29 20.14 7.36
Operating Margins 32.66% 29.55% 33.66%
Net Margins 7.59% 15.78% 5.88%
Gross NPA Ratio 2.21% 2.19% 2.53%
Net NPA Ratio 0.52% 1.12% 0.86%
Return on Assets 0.85% 1.98% 0.69%
Capital Adequacy 16.55% 14.70% 15.16%

Key takeaways from the Sep-20 quarter results

  • The gross NPAs have come down on a sequential basis and the good news is that the net NPAs are now down to 0.52% less than half of Sep-19 figure. Clearly, most of the potential loss accounts are already provided for.
  • The bank has robust ROA at 0.85% but it may have to look at boost its capital base in the year as the capital adequacy of 16.5% leaves limited room for expanding the loan book. Also, the full effect of COVID losses is not fully factored into the numbers.

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