By Ashwin Manikandan and Nishit Navin
MUMBAI/BENGALURU (Reuters) -India’s IndusInd Bank said on Monday it “financials have returned to profitability”, as it swung back to profit in the first quarter after its biggest-ever loss in the previous three months.
The Mumbai-based bank on Monday reported a 68% fall in profit to 6.84 billion rupees ($78.93 million) for the quarter ended June 30, as its loans declined and funds kept aside for potential bad loans rose.
The bank is enforcing stringent cost management strategies, Chairman Sunil Mehta said in a post-earnings call, adding that it would try to contain annual operating expenditure growth to a single-digit figure from the current 20%.
The bank took a $230 million hit in the fiscal year ended March 31 due to years of misaccounting of internal derivative trades, prompting the resignations of CEO Sumant Kathpalia and deputy Arun Khurana in April.
IndusInd is progressing “per schedule” to appoint a new chief executive, and has submitted its recommendations to the Reserve Bank of India, Mehta said.
“The financial impact of the legacy issue is now behind us and the leadership transition is well on track,” Mehta added.
The lender, steered by the board and a panel of two senior officials in the absence of a CEO, will also make changes to its top management and bring in at least two new directors to its board, Mehta said.
The bank’s total loans fell 3.1% from a quarter earlier, while deposits dropped 3.3%.
Net interest income, the difference between interest earned and paid, fell to 46.40 billion rupees from 54.08 billion rupees a year earlier.
The private lender has been grappling with elevated bad loans in its microfinance book, forcing it to set aside more funds to meet potential losses.
Its provisions and contingencies rose 65.5% year-on-year to 17.38 billion rupees, while gross non-performing assets rose to 3.64% at June-end from 3.13% at March-end.
($1 = 86.6600 Indian rupees)
(Reporting by Nishit Navin and Ashwin Manikandan; Editing by Mrigank Dhaniwala and Shinjini Ganguli)
