Private sector lender IndusInd Bank on Tuesday said that it will raise Rs3,288 crore through a preferential issue of shares to its promoter Hinduja group and other institutional investors.
Promoter entities, including Hinduja Capital and IndusInd International, will infuse Rs.792 crore. Investors participating in the issue include Route One Fund and Route One Offshore, which will together contribute Rs.935 crore. The RBI had earlier approved an investment of up to 10% by Route One in IndusInd Bank. Other investors include ICICI Prudential Life Insurance, Tata Investment Corp Ltd and AIA Co Ltd. The preferential issue shares will be allotted at a price of Rs524 apiece.
Also announcing its Q1 results on Tuesday, the lender reported a 67.86% decline for June quarter profit, dented by higher provisions. The profit during the quarter declined to Rs.460.40 crore compared to Rs.1432.50 crore reported in the same quarter last year. Profit was lower than Rs.724.90 crore estimated by a Bloomberg poll of 16 analysts.
Net interest income, the difference between interest earned and interest expended, grew by 16.36% YoY to Rs.3309.19 crore in Q1 over Rs.2843.99 crore for the corresponding quarter last year.
Provisions during the quarter increased more than four-folds to Rs.2258.88 crore as against ₹430.62 crore a year ago.
Asset quality was almost stable with gross non-performing assets (NPAs) as a percentage of total loan rose to 2.53% as compared to 2.15% a year ago and 2.45% in the previous quarter ending March 2020. Net NPAs fell to 0.86% from 1.23% in the same quarter last year and 0.91% in the previous quarter.
“We have done a stress test end of June. After reviewing the businesses, our slippages will be 92 bps higher than what is normal as a consequence of covid and our incremental provision cost will be 65 bps against 53 bps which we had said in covid 1.0. The overall affected number is ₹1336 crore of which we had made ₹1206 crore of provision," said Sumanth Kathpalia, managing director and chief executive officer, Indusind bank
Non-interest income fell 8.66% to Rs.1519.19 crore as compared to Rs.1663.25 crore in Q1FY20.
Loan growth fell 4.2% to Rs.1.98 lakh crore at the end of June quarter compared to Rs.2.06 lakh crore at the end of previous quarter. Loan book under moratorium reduced to 16% as of June 2020 from 50% as of April 2020.
While the management avoided giving any targets on credit growth for the full year, they said that the bank will continue to be conservative and yet they see some pick up in loan growth in micro, small and medium enterprises (MSME) sector in the coming months.
“We are seeing green shoots in vehicle finance and we are going slow on unsecured portfolio," said
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