IndusInd Bank’s Performance in Q1 2021
IndusInd Bank faced a decline in asset quality due to issues with its micro loans business, impacting its net profit for the quarter ending in June. This decline follows a previous accounting episode that raised concerns about governance and future planning.
Financial Results
In the June quarter, the private sector bank reported a standalone net profit of Rs 684 crore. This marked a significant turnaround from the loss of Rs 2,236 crore in the previous quarter. The results were in line with the predicted Rs 653 crore as per a Bloomberg poll.
Chairman Sunil Mehta mentioned that the bank’s Q1 results did not carry forward previous irregularities. Despite this positive outlook, the bank still faces challenges in growth and asset quality.
Asset Quality Concerns
IndusInd Bank’s gross non-performing assets ratio worsened to 3.64% from 3.13% in the previous quarter. The net NPA also rose to 1.12% as of June 30.
Microfinance loans remain a problem area for the bank, with gross NPAs in this segment increasing to Rs 5,298 crore. The bank’s microloan book, constituting 8% of its total loans, decreased by 8% to Rs 28,408 crore.
Future Outlook
The bank is taking a cautious approach towards microfinance and expects stability in the third quarter regarding slippages. Upgrades and recoveries show a positive trend compared to the previous quarter.
IndusInd Bank reported stable profitability metrics, although there is room for improvement. The net interest income saw a significant increase year-on-year, leading to a rise in net interest margin to 3.46%.
The bank’s chairman emphasized the need to enhance control over its microfinance subsidiary and improve financial return metrics in the future.
For more information on IndusInd Bank’s performance and the latest financial updates, you can visit IndusInd Bank.
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