IndusInd Bank Reports 16% Dip In Net Profit In Q4, Axis Bank Profit Likely To Take Hit Too

Markets will keep a close watch on bank results after the Yes Bank debacle left investors jittery

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New Delhi, April 28: In quarterly results season when banks are being watched closely after the Yes Bank debacle, IndusInd Bank reported a 16 per cent year-on-year (y-o-y) decline in its net profit at ₹301.84 crore for the three months to March as a result of rising in provisions. The bank’s net interest income or the difference between interest earned and expended stood at ₹3,231.19 crore, up 44.74 per cent from the same period last year. However, the net interest margin (NIM), a measure of its profitability, was at 4.25 per cent in Q4FY20, up 10 basis points (bps) from Q3 FY20 and rose 66 bps from Q4 of the previous financial year, according to Livemint report. The bank’s newly-appointed chief executive Sumant Kathpalia stated that the bank took note of the covid-19 situation and conducted a full portfolio analysis on the corporate and retail side of its businesses. The bank’s gross bad loan ratio or bad loans expressed as a percentage of total loans, also increased 35 bps on a y-o-y basis to 2.45 per cent in the quarter. However, the net bad loan ratio was lower by 30 bps y-o-y owing to an increase in provisions. Its provision coverage ratio (PCR) increased to 63.34 per cent in March, 2020 from 43.04 per cent in March 2019. The bank in a statement said there is a high level of uncertainty about the duration of the lockdown and the time required for things to get normal. After the results, shares of IndusInd Bank jumped 6.33 per cent to close at ₹407.35 per share, while the benchmark Sensex index saw a marginal rise of 1.33 per cent to close at 31,743.08 points. Even Axis Bank will announce its fourth quarter earnings on Tuesday. The third-largest lender is expected to report a decline in profit in the fourth quarter due to higher loan loss provisions though lower tax rate may cushion the fall, according to the estimates by brokerage firms in a Moneycontrol report.