India IndusInd Bank sees margins largely flat “going forward”

By Sethuraman N R and Siddhi Nayak

BENGALURU (Reuters) -India’s IndusInd Bank said on Thursday it expects net interest margin (NIM) remaining largely flat “going forward,” helped by its loan portfolio.

The bank’s NIM – the difference between interest obtained on loans and interest paid on deposits expressed as percentage – edged up to 4.29% from 4.27% a year ago, and was unchanged from the previous quarter.

The bank’s NIM will be rangebound between 4.2%-4.3% going forward because of its loan portfolio, CEO Sumant Kathpalia said in a media call. He did not specify how long it expects margins to remain in this range.

He added that the bank was seeing pressure on deposits currently, and that flattening of deposit rates will begin from April-June.

IndusInd’s net interest income – the difference between interest earned and paid – rose to 52.96 billion rupees from 44.95 billion rupees a year ago.

While Indian lenders have been reporting double-digit loan growth consistently over the past few months, the cost of deposits has risen, pressuring margins.

HDFC Bank, India’s top private bank, reported weak margins for a second consecutive quarter on Tuesday.

IndusInd’s net profit rose 17.3% from last year to 22.98 billion rupees ($276.5 million) for the quarter ended Dec. 31, compared to analysts’ expectations of 22.78 billion rupees as per LSEG data.

IndusInd’s loan disbursements grew 20% year-on-year, while deposits rose 13%. Kathpalia expects 18%-22% loan growth for the fiscal years 2024 and 2025.

The bank also had a 30 basis points impact on capital ratios due to the Reserve Bank of India raising higher risk weightage on unsecured loans, Kathpalia said.

The bank’s exposure to alternate investment funds stood at 1.13 billion rupees, which it is planning to sell out soon, he added.

($1 = 83.1090 Indian rupees)

(Reporting by Sethuraman NR in Bengaluru and Siddhi V Nayak in Mumbai; Editing by Varun H K)