India's IndusInd Bank beats Q4 profit view on strong loan growth

By Dimpal Gulwani and Siddhi Nayak

BENGALURU (Reuters) -India's IndusInd Bank narrowly beat fourth-quarter profit estimates on Thursday, aided by healthy loan growth, but the lending margin dropped slightly both on a sequential and year-on-year basis.

The private lender posted a net profit of 23.47 billion rupees ($281.7 million) for the quarter ended March 31, compared with 20.41 billion rupees a year earlier.

Analysts, on average, expected a profit of 23.24 billion rupees, as per LSEG data.

Indian banks have continued to focus on strengthening deposit growth due to tighter liquidity conditions, even as higher consumer spending kept loan growth afloat.

Higher deposit costs - a byproduct of high interest rates - have squeezed banks' margins.

IndusInd's net interest margin (NIM) - the difference between interest obtained on loans and interest paid on deposits - fell to 4.26% from 4.28% a year earlier and 4.29% last quarter.

The bank aims to keep lending NIM between 4.2%-4.3% in the coming quarters amid system-wide pressure to garner deposits due to tight liquidity conditions, it said in a post-earning call.

Net loans grew 18%, outpacing a 14% growth in deposits. The bank aims for a loan growth of 18%-22% for the financial year 2025, the bank added.

Net interest income - the difference between interest earned and paid - rose 15% to 53.76 billion rupees.

The bank's gross net-performing assets ratio was at 1.92%, flat from the previous quarter.

The bank is continuously evaluating its digital capabilities and making sure to remain updated on any technology-related issues, said CEO Sumant Kathpalia.

Total IT spends currently account for about 8%-10% of cost to income, Kathpalia added.

The comment comes a day after India's central bank barred Kotak Mahindra Bank from taking on new digital clients and issuing credit cards citing information technology-related deficiencies.

Separately, IndusInd is not privy to any communication between its promoter and the central bank regarding the promoter hiking its stake in the bank, it said.

($1 = 83.3027 Indian rupees)

(Reporting by Dimpal Gulwani in Bengaluru; Editing by Varun H K and Sohini Goswami)