Private sector lender IndusInd Bank’s net profit grew 29% for the quarter ended December 31 due to a significant drop in the cost of funds.
The lender posted a net profit of ₹750.64 crore for the third quarter as compared with ₹581 crore recorded during the same period of the previous year helped by net interest income (NII) growth of 35% to ₹1,578.42 crore. NII rose despite credit-to-deposit ratio dropping 3 percentage points to 86% during the quarter. Non-interest income grew by 21% to ₹1,017 crore.
“NII growth was due to fall in cost of funds which was 34 bps,” said Romesh Sobti, MD & CEO, Indusind Bank. “The fall in yield on advances was much less.”
As a result, the bank maintained its net interest margin at 4% for the second successive quarter.
The bank hopes to maintain its margins, going ahead, despite a softening of interest rates.
“Since 70% of our loan book is on fixed rate, the pace of yield dropping on the retail side will be lower,” Mr. Sobti said.
The demonetisation exercise helped the lender to increase its share of low cost deposits to 37% from 35% during the quarter.
