Sumant Kathpalia, CEO, IndusInd Bank.

MUMBAI : IndusInd Bank clarified on Tuesday that it has no plan to raise additional capital, despite its promoter, the Hinduja group, seeking to raise its stake in the bank.With a total capital adequacy of 18%, the bank believes it is well-capitalized and will not look at raising fresh capital unless the core equity capital falls below 14%. Currently, the common equity tier 1 capital (CET1) or a bank’s core capital stands at 16.44%.

“We have not had a capital discussion with the promoter because we are not planning to raise capital. We will maintain CET 1, and we will only raise capital only if capital adequacy if CET1 falls below 14%. We are well capitalized with 16.5%, and we don’t see the need for any capital," said Sumant Kathpalia, chief executive officer of IndusInd Bank.

Earlier this month, the Hinduja Group, in a press release, said that the group is looking to raise $1.5 billion to meet its twin strategic objectives, one of which is raising its stake in IndusInd Bank from the current 15% to 26%.According to an ET Now report, the Hindujas are looking to infuse ₹10,000 crore in the bank by the second half of the fiscal year.

This decision to increase its stake in the bank comes after the Reserve Bank of India gave an in-principle and conditional approval to IndusInd International Holdings last year to raise its stake in IndusInd Bank to 26%.The Hinduja group currently holds a 16.49% stake in the bank, with IndusInd International Holdings owing 12.57% and IndusInd Ltd holding a 3.93% stake as of the June quarter.

IndusInd Bank declared its first quarter results on Tuesday, with net profit seeing a 30% jump on higher net interest income and lower provisions.

Net interest income (NII) or core income grew 18% to ₹4,867 crore in the June quarter from ₹4,125 crore in the year earlier. Net interest margin (NIM) stood at 4.29% in the fiscal first quarter against 4.28% in the previous quarter.

Other income grew 14% to ₹2,210 crore from ₹1,932 crore in the year-ago period. Operating expenses jumped 24% to ₹3,246 crore on retail expansion and higher employee costs. The management expects a cost-to-income ratio of 45% for a few more quarters before it tapers to 43%. Provisions and contingencies fell 21% to ₹991 crore in the first quarter from ₹1,251 crore in the year earlier.

Asset quality remained stable, with gross non-performing assets at ₹5,941 crore at the end of the Q1FY24 compared with ₹5,826 in Q4FY23. As a percentage of total assets, gross NPA stood at 1.94% at the end of the first quarter compared with 1.98% in the previous quarter.

The loan book saw a strong growth of 22% year on year to ₹3.01 trillion and 4% sequentially. Deposits grew 15% from a year earlier to ₹3.47 trillion and 3% sequentially. Growth in advances was driven by both corporate and small businesses. The management clarified that the bank would look at granularizing and diversifying the retail loan book into home loans, tractor loans, etc.

Courtesy: Mint