Bank makes additional provisions as a prudent measure
MUMBAI: Despite a huge provision of Rs606.68 crore, a big portion of which is understood to be against bank’s exposure to the beleaguered IL&FS Group, Indusind Bank Ltd has reported a marginal year on year growth of 5.21 per cent in its Q3 net profit at Rs985.03 crore against Rs936.25 crore it posted for the same period last year.
While the total income for the three-month period ending December 31, 2018 was to the tune of Rs7232.32 crore compared with Rs5473.54 crore for the same period last year, representing 32 per cent growth, the provisions surged from Rs236.16 crore to Rs606.68 crore for the period under review.
The interest income increased from Rs4286.78 crore to Rs5763.47 crore year on year, whereas the other income also reported a modest growth – from Rs1186.76 crore to Rs1468.85 crore during the said period.
With the regard to the additional provisions the bank has made during the quarter, the management has stated that these are made against advances granted to various companies and SPVs belonging to a Group in the infrastructure sector to cover certain identified cash flows and pertaining to specific assets.
“These are classified as ‘standard’ as at December 31, 2018 in compliance with RBI Master Circular on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to the Advances Portfolio (IRAC norms) on the basis of the conduct of the accounts til1 date,” the bank explained.
Certain governance and management changes have taken place in the said Group during the past few months, and measures to tum the group around through a Resolution Plan are reported to be underway.
“In the interim, as a prudential measure, the bank has made a contingent provision of Rs255 crore on these ‘standard’ assets, which is included under Provisions during the quarter ended December 31, 2018, in addition to an amount of Rs275 crore made during the quarter ended September 30, 2018,” the bank further said.