When we look at the highlighted section of IndusInd Bank Ltd’s income statment, it is evident that the drastic increase in profitability stems from the reduction of Provisions & Contingencies amount. That would explain as to why the YoY growth for Operating Profit is 10% whereas the YoY growth for Profit Before Tax is 59%.
Drastic Decrease in Provision and Contingencies:
| ₹ in Cr. | Q2FY23 | Q2FY22 | YoY (%) |
| Net Interest Income | 4,302 | 3,658 | 18% |
| Other Income | 2,011 | 1,841 | 9% |
| Total Income | 6,313 | 5,500 | 15% |
| Operating Expenses | 2,769 | 2,277 | 22% |
| Operating Profit | 3,544 | 3,223 | 10% |
| Provisions & Contingencies | 1,141 | 1,707 | (33%) |
| Profit Before Tax | 2,403 | 1,516 | 59% |
| Provision for Tax | 598 | 369 | 62% |
| Profit After Tax | 1,805 | 1,147 | 57% |
Key Ratios:
A high share of CASA Deposits proved that sources of funds are healthier and stable compared to other sources of deposits. As interest charged on CASA Deposits are lower than other forms of deposits. So, they contribute to higher Net Interest Margin.
The higher net interest margins results in IndusInd Bank Ltd. to observe one of the highest operating margins in the Industry.
Asset Quality:
Asset Quality of IndusInd Bank Ltd. for this quarter can be assessed through the movement in the Bank’s non performing assets. It is evident through the below diagram that there is positive movement on non performing assets.
On a QoQ scale, there has been a decrease from both Gross Non Performing Assets and Net Non Performing Assets.