IndusInd Bank stock falls 3.9% as its net profit grows by 33%

• IndusInd Bank today posted 33% increase in its third quarter net profit to ₹1,309 crore.
  
• Its net interest income too went up by 34% to ₹3,074 crore from ₹2,288 crore in the comparable quarter.
  
• The fee income of this bank which has been banking heavily on its retail business, also went up by 22%.
  
• Its deposits and advances too went up by a robust 22% on an annual comparison.

Hindujas owned IndusInd Bank today posted 33% increase in its third quarter net profit to ₹1,309 crore from ₹985 crore in the same quarter last year. Its net interest income or revenues too went up by 34% to ₹3,074 crore from ₹2,288 crore in the comparable quarter.

The fee income of this bank which has been banking heavily on its retail business, also went up by 22%. Its deposits and advances too went up by a robust 22% on an annual comparison.

“During Q3 FY-20, the Bank witnessed a healthy growth in its topline as well as in operating profits. The Bank also reached a milestone as the Balance Sheet footage crossed ₹ 3 trillion and the advances crossed the ₹2 trillion-mark. PCR (provisioning coverage ratio) has been increased to 53% to strengthen the balance sheet,” said Romesh Sobti, managing director and CEO, IndusInd Bank said.

However, the bank’s stock dropped by 2.9% to ₹1,493 as per BSE data at 3 pm.

The bank which acquired Bharat Financial in 2017, is banking on its expanded footprint especially in the rural areas to drive growth going ahead. The acquisition turned effective on July last year, allowing the bank to derive full benefits of acquiring the shadow bank. A research note by Nomura says that the acquisition is a moat for the bank.

“The asset side franchise has strengthened with BHAFIN, and IIB will undergo a full-fledged extension of the pilots that management believes will enable it to use Bharat Financial’s reach to create a rural touchpoint network that provides significant cross sell opportunity and also improve efficiency in a manpower-intensive MFI business,” said Nomura.

The research note also believes that asset side strengths of the bank will be able to offset weaknesses in liabilities. “Bulkiness in liabilities and fees, apart from recent corporate asset quality issues, has been IIB's key weakness. While it is easier said than done, if the bank delivers well on granularizing its liabilities and successfully monetizing rural distribution via BHAFIN, it should drive a sustainable re-rating, in our view,” the note said.