BENGALURU (Reuters) -India’s IndusInd Bank reported first-quarter profit below estimates on Friday, hurt by slower loan growth, while lending margins shrunk slightly.
The private bank posted a net profit of 21.52 billion rupees ($257.1 million) for the quarter ended June 30, up 1.3% from last year.
Analysts were expecting a profit of 23.33 billion rupees as per LSEG data.
IndusInd’s net interest income – the difference between interest earned and paid – rose 11% to 54.08 billion rupees, missing analysts expectations of 55.54 billion rupees.
Indian banks have seen consistently strong loan demand helped by healthy economic growth and urban consumption, leaving them scrambling for funds.
They are choosing to try to attract deposits at a faster pace, or slow down loan growth to cushion their margins.
IndusInd Bank’s net loans and deposits both grew 15%. The loan growth was smaller compared to an 18% jump last quarter and a 22% growth a year earlier.
Net interest margin (NIM) shrunk marginally 4.25% from 4.26% in the previous quarter and 4.29% a year earlier.
NIM reflects the margin earned by a bank in its core lending business, and is a key metric of profitability.
Other private lenders – Kotak Mahindra Bank and Yes Bank – also reported contractions in NIM for the June quarter.
Provisions, or funds kept aside to cover potential bad loans, rose about 6% to 10.50 billion rupees from a year earlier.
Axis Bank had reported a smaller-than-expected first quarter profit on Wednesday on higher provisions for bad loans.
IndusInd Bank’s asset quality deteriorated, with gross non-performing assets ratio (NPA) at 2.02% at the end of June, compared with 1.92% three months earlier.
Shares of IndusInd Bank closed up 1.8% ahead of the results.
($1 = 83.6930 Indian rupees)
(Reporting by Dimpal Gulwani and Varun Hebbalalu in Bengaluru; Editing by Varun H K)
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