Private sector lender IndusInd Bank reported a 26 per cent rise in net profit at ₹421 crore in the first quarter ended June 31, 2014, on the back of robust fee income and advances.

Net profit in the April-June quarter last year stood at ₹335 crore.

Net interest income, the difference between interest earned and expended, was up 18 per cent at ₹801 crore as against ₹679 crore in the corresponding quarter of the previous year. Other income rose 22 per cent, boosted by income from core fee (38 per cent), investment banking (74 per cent) and foreign exchange remittances (46 per cent).

Lower provisioning In the reporting quarter, provisions declined to ₹110 crore (from ₹132 crore). This includes a provision of ₹20 crore towards its corporate clients and un-hedged exposure of ₹10 crore.

“We provided double the exposure amount to be on the safer side and expect to get a write-back of the same or will pass it on to the corporates,” said Romesh Sobti, MD and CEO of the bank.

Net interest margin saw a decline to 3.66 per cent from 3.72 per cent in the same quarter last year due to high cost of deposits.

“Cost of deposits is now seeing a downtrend and, going forward, our deposits will be higher than the borrowings. NIMs would see improvement in the latter part of the year,” Sobti said.

Bad loans On the asset quality front, gross non-performing assets (NPAs) worsened slightly to 1.11 per cent as against 1.06 per cent in the year-ago period.

Net NPA was also up at 0.33 per cent from 0.21 per cent in the corresponding quarter of last fiscal. Sequentially, both gross and net NPAs remained flat.

Total advances grew 24 per cent, while deposits were up 15 per cent.

“Credit costs are stable in corporate loans, while stress has bottomed out in the commercial vehicles segment. We will see improvement in the third or the fourth quarters,” Sobti added.

Shares of the bank ended 1.65 per cent weaker, at ₹543.40 a share on the BSE.