After the Yes Bank crisis, IndusInd Bank says it is financially sound and well capitalized

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The bank’s shares closed down nearly 9% at Rs 604.30 on BSE on Tuesday.

Private sector lender IndusInd Bank has said it is financially strong, well capitalized and profitable, amid market rumors about the health of the lender following the exposure of the Yes Bank crisis.

“In the wake of the significantly higher level of market rumors and speculation around IndusInd Bank shares, we would like to reiterate that the Bank is financially sound, well capitalized, profitable and a growing entity with strong governance”, he said in a late-night statement on Tuesday.

The bank’s shares closed down nearly 9% at Rs 604.30 on BSE on Tuesday.

The lender said gross non-performing assets (RPA) in the December 2019 quarter stood at 2.18%, the lowest among large private sector banks.

“We expect this quarter’s gross NPA to be roughly in line with last quarter. We expect our net NPA of 1.05% last quarter to fall below 1%, in line with our ambition to cover provisions above 60%, ”he said in the statement.

Citing reports on measures to aid the telecommunications sector, IndusInd Bank said it was an important positive step and that the bank is awaiting more details on the matter.

The bank noted that its last gross NPA figure at the end of February 2020 was zero for the real estate developer (commercial and residential); financing of precious stones and jewelry.

Commercial vehicle and microfinance portfolios remain stable and limited, he added.

“Market rumors of touring solo shows are inflated and far-fetched and far from the truth. The bank publishes comprehensive information on its loan portfolio profile on a quarterly basis. “

Regarding liquidity, he said the bank maintains liquidity well above 100%, going up to 120% on a daily basis.

The bank’s deposit activity in the retail and corporate segments is stable.

“However, a few state government entities have made withdrawals representing less than 2% of our total deposits. We engage with them to reiterate the regulator’s position that government deposits in all private sector banks are safe.” , the bank said.

The bank was a lender in the interbank market last week and at 15.43 percent CRAR – risk-weighted capital-to-asset ratio – (including 9-month earnings) the bank does not need to capital for 2 years.

“All of our banking transactions with other banks and counterparties are proceeding as usual. We continue to enjoy the interbank lines / limits without interruption, ”said the lender.

In addition, the bank’s promoter has sought approval from the RBI to increase its stake to 26% and further guidance from the regulator is expected.

The promoter has already informed the stock exchange of the simultaneous release of the non-sale commitment with the constitution of a pledge relating to 23.8 million shares of the bank.

No new loans were taken out and were only a formalization of a three-year-old agreement. The money was initially raised to make an overseas acquisition that didn’t pay off – the pledge is a small fraction of the promoter’s holding in the bank, he said.

“Various rumors and market speculations wrongly reflect the financial health of the bank and are totally misplaced, motivated and not based on fact,” the lender said.

IndusInd Bank shares traded 27.19% at Rs 440 on BSE.

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