InvestorQ : Why has IndusInd Bank reported such poor numbers in this quarter?
vidhya Laxmi made post

Why has IndusInd Bank reported such poor numbers in this quarter?

Answer
image
1 year ago
Follow

In a nutshell – IndusInd takes a big hit on NPA classification of loans to IL&FS

IndusInd reported a 63% fall net profits for the March quarter at Rs.361 crore. The net interest income of the bank was 11% higher at Rs.2232 crore. The bank took an NPA classification of Rs.3004 crore due to its exposure to the IL&FS group. NCLAT had originally given the banks immunity from showing their IL&FS bad debts but later due to pressure from the RBI, most banks are voluntarily disclosing their exposure to IL&FS. The fall in profits was largely on account of this hit and it also plans to take a hit for its provisions to Jet Airways and to the Essel Group. The stock markets actually welcomed the move as it is seen as a step towards transparency because it will give a clearer picture of their NPA situation.

The immediate worry on the bank could be that the gross NPAs have jumped by nearly 100 bps to 2.10% and there could be more to follow. It is perhaps time to be cautious on the stock for now. The stock of IndusInd was quoting at Rs.1518 and was up by 5% on Wednesday after made a clear disclosure of its IL&FS exposure.

1 Views