On Wednesday, IndusInd Bank reported that its standalone net profit for the first quarter of fiscal 2023 rose 64.4% year-on-year to Rs 1,603.29 crore, driven by healthy growth in net interest income.

The private sector lender reported a profit after tax of Rs 974.95 crore in the first quarter of the previous fiscal. Subsequently, IndusInd Bank’s net profit rose 17.8% from Rs 1,361.37 crore in January-March.

The private bank’s net interest income rose 16% year-on-year to Rs 4,215 crore last quarter. Net interest income – the difference between earned and paid interest – rose 4% sequentially.

IndusInd Bank’s net interest margin during the period under review was 4.21%, compared with 4.06% in the same period last year and 4.2% in January-March.

The bank’s other income stood at Rs 932 crore in April-June, up 12% from Rs 723 crore a year ago. Core expenses rose 47% year on year to Rs 786 crore from Rs 214 crore a year ago. Deposits at the IndusInd Bank of India stood at Rs 3.02 trillion as of June 30, up 13% from Rs 2.67 trillion a year ago.

Current Account Savings Account (CASA) deposits, which are low-cost deposits, rose to Rs 1.3 trillion (as of June 30), of which the share of current account deposits was Rs 35,265 crore, and the share of savings account deposits was Rs 95,243 crore.

The bank said that CASA deposits accounted for 43% of total deposits as of June 30. The bank’s advances stood at Rs 2.47 trillion, up 18% from Rs 2.1 trillion a year ago.

On the bank’s guidance for a net interest margin of 4.15-4.25%, MD and CEO Sumant Kathpalia said on the earnings call that the bank is confident of meeting this target this year even as rising deposit rates are in RBI’s monetary tightening cycle.

On the credit side, Kathpalia said that while the bank is growing at a compound annual growth rate (CAGR) of 16-18% per annum, the bank is targeting a CAGR of 20% this year to “catch up” with previous years 12%.

Kathpalia said the IndusInd Bank saw an opportunity in the RBI’s recent relaxation of non-resident external account deposits and was trying to get more NRE deposits.

Banks will not have to maintain CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) for incremental deposits flowing into FCNRB (Foreign Currency Non-Resident Bank) and NRE deposits starting July 30, the RBI said. The relaxation applies to deposits transferred before November 4.

Regarding asset quality, as of June 30, Industrial Bank’s total non-performing asset ratio was 2.35%, lower than the 2.88% in the same period last year but higher than the 2.27% in the previous quarter.

The net NPA ratio was 0.67% as of June 30, compared to 0.84% a year earlier and 0.64% as of March 31. IndusInd Bank’s provision coverage ratio stood at 72% as of June 30, while the Basel III capital adequacy ratio remained at 18.14%.