IndusInd Bank Share IndusInd Bank

IndusInd Bank Ltd (updated - 11 Jan 2012)
IndusInd Bank has bucked the trend, posting a loan growth of 30% during the quarter to December 2011. In an environment of high inflation, an interest rate cycle which had peaked, a 10% decline in the value of the rupee and the ongoing European debt crisis, and deteriorating loan quality, the private lender surprised on all counts.

Despite a difficult operating environment, IndusInd Bank reported a 34% year-on-year jump in net profit to Rs 205.93 crore. Its net interest income, which is the difference between interest earned and interest paid, rose by 19% to Rs 430.62 crore.

Though macro economic conditions have worsened since September, the bank management has managed to bring down the cost of credit during the quarter and is confident of maintaining it below last years levels.

Its net nonperforming assets or bad loans have risen by Rs 1 crore since September, but have decreased as a percentage of its total loans. On the flip-side, its net interest margin declined 10 basis points. This was primarily because the 90-day money lending rate rose as high as 10% in December.

According to the management, its continuous thrust on investment in expanding its business has paid off. The 46% growth in fee income is a clear indication of the rise in the number of clients the bank has attracted and its management is strongly focusing on this avenue as a revenue driver in the coming quarters.

Shares of IndusInd Bank rose over 6%, following its results announcement. At Rs 260.85 the stock trades at 2.8 times its book value. The bank’s return on assets is 1.55% and it has a capital adequacy ratio of 13.43. Though this ratio has fallen since the last quarter, considering the bank is expanding, it would need to bolster capital. Another concern is the fall in its net interest margin from 3.41% at the beginning of the fiscal to 3.25% at present, which is significantly below last year’s annualised level of 3.47%.

The bank management reckons that RBI will either lower the cash reserve ratio or the bank rate at its next monetary policy review this month. That should provide a further boost to the bank’s profitability.
Source - Economic Times

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