Leading private lender IndusInd Bank is expected to report healthy growth in net interest income (NII) for the quarter ended December on the back of solid loan growth.
NII for the third quarter is likely to grow around 16% year-on-year, according to an average estimate of five analysts. The NII growth is likely to be slightly slower than 18% posted in the preceding September quarter.
On a sequential basis, NII would rise by a marginal 2%.
Further, an average of four estimates by brokerages indicates that the net profit in October-December is seen growing 11% year-on-year.
The lender saw 20% year-on-year growth in net advances in the third quarter at Rs 3.26 lakh crore, while deposits jumped 13% to Rs 3.68 lakh crore.
Non-interest income should be subdued in the reporting period due to lower treasury income and other fee income. Meanwhile, asset quality is expected to be broadly stable.
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Here’s what brokerages expect from IndusInd Bank’s Q3
Kotak Equities
We expect a 2% YoY rise in PPOP (pre provision operating profit), led by lower contribution from non-interest income and higher operating costs growth.
We expect provisions to keep declining, led by lower slippages and better asset quality trends. Both the MFI and vehicle finance portfolio is showing negligible risk. We are building slippages of 1.7% (Rs 1400 crore). Key focus areas would be the cost of funds and ability to sustain current levels of loan growth.
Motilal Oswal
Expect loan growth to remain healthy. Deposit traction would be closely monitored. Expect asset quality to remain broadly stable. Expect margins to be stable. Credit cost to witness a gradual moderation as PCR remains healthy.
Dolat
The Bank reported healthy loan growth at 4% QoQ/ 20% YoY. Sequential NIM to be stable at 4.3%. With unlikely usage of contingent buffers in Q3 (used Rs 1800 crore in Q2), sequentially higher credit cost at 130 bps to limit PAT growth. Build in RoA of 1.8%.
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Nuvama
IndusInd Bank’s business update is healthier than peers but softer than Q2FY24. Loan growth is healthy at 3.6% QoQ though slower than 4.6% in Q2FY24. Deposit growth slowed to 2.6% QoQ versus 3.5% QoQ.
While CASA remained flat QoQ, retail LCR deposits grew 5% QoQ. Higher slippage and reduction in the contingent provisioning buffer have been two key concerns for IIB in the last three quarters. These shall be incrementally positive in Q3FY24.
We expect credit cost of 1.2% and do not expect the bank to draw down any further from the provisioning buffer. In Q2FY24, there was a lumpy corporate slippage of Rs 200 crore. Even in Q3FY24 there could be a corporate slippage of Rs 100 crore. We expect total slippage to decline QoQ.
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