By VarunVyas Hebbalalu and Siddhi Nayak
BENGALURU/MUMBAI (Reuters) -India’s IndusInd Bank reported a bigger-than-expected rise in first-quarter profit on Tuesday, lifted by strong loan growth and a drop in provisions for bad loans.
The private lender’s net profit rose 32.5% year-on-year to 21.24 billion rupees ($258.9 million). Analysts had expected a profit of 20.55 billion rupees, per Refinitiv data.
Loans at many banks have grown in double digits, despite the Reserve Bank of India raising interest rates by 250 basis points since May 2022, highlighting strong demand for credit.
IndusInd’s loans grew 22% year-on-year, while deposits rose 15%.
“The loan growth was supported by retail deposit growth of 21% YoY and overall deposit growth of 15%,” CEO Sumant Kathpalia said in a statement.
Kathpalia also set out a target to build its nascent home loan book to 150 billion rupees in next 3 years.
Provisions and contingencies, or funds set aside to cover loan losses, were down 20.7% at 9.92 billion rupees.
The bank’s net interest income – the difference between interest earned and paid – rose 18% to 48.67 billion rupees.
Meanwhile, net interest margin (NIM), an indicator of the bank’s profitability, increased to 4.29% from 4.21% a year ago. The lender expects NIM to stay between 4.2-4.3% in the coming quarters.
Asset quality improved slightly, with gross non-performing assets ratio easing to 1.94% from 1.98% in the last quarter.
Kathpalia also said that the bank has not had any capital-related discussions with key shareholder Hinduja Group, adding that the lender would raise capital when CET-1 ratio falls below 14%. The number stood at 16.44% at the end of June.
India’s largest private lender, HDFC Bank, on Monday also reported a larger-than-expected 30% jump in first-quarter profit.
Shares of IndusInd Bank closed flat ahead of the results. Its shares are up 14% so far this year, outpacing a 5.6% rise in the Nifty Bank index.
The lender said earlier this week said it would consider a fundraise through debt securities on Thursday.
($1 = 82.0346 Indian rupees)
(Reporting by Varun Vyas in Bengaluru; Editing by Varun H K)