Earnings Outlook
IndusInd Bk PAT seen flat on slowing loans, high slippages
This story was originally published at 11:42 IST on 22 October 2024
Register to read our real-time news.Informist, Tuesday, Oct. 22, 2024
By Kshipra Petkar
MUMBAI - Slower loan growth and elevated slippages will take a toll on IndusInd Bank's net profit for the quarter ended September, with the private lender's bottom line seen only 1.3% higher from last year at INR 22.1 billion, according to the average of estimates by 14 brokerages. On a sequential basis, the net profit is seen 2.7% higher.
Analysts' estimates for IndusInd Bank's quarterly net profit are in the range of INR 20.65 billion and INR 23.81 billion. The bank will announce its Jul-Sept earnings on Thursday. At 1033 IST, shares of IndusInd Bank were at 1,296.15 rupees, down 0.9% from the previous close.
As per the provisional business numbers given by the bank to exchanges on Oct. 4, IndusInd Bank's net advances stood at INR 3.57 trillion as on Sept. 30, up 13.2% on year. Deposits, meanwhile, were 14.7% higher at INR 4.13 trillion. These numbers compare unfavourably with those at the end of June, when loan and deposit growth stood at 15.5% and 14.8%, respectively. Consequently, the bank's net interest income is seen rising 9.1% on year to INR 55.36 billion and 2.4% quarter-on-quarter.
Brokerage firms also expect IndusInd Bank's margins to moderate in Jul-Sept, with Kotak Institutional Equities predicting it will decline to 4.1%. In Apr-Jun, the bank's net interest margin was 4.25%.
While announcing the Apr-Jun results, Sumant Kathpalia, managing director and chief executive officer of the bank, had said IndusInd Bank wants its loan growth to be in the range of 18-23% for the full year. However, the first quarter of 2024-25 (Apr-Mar) had seen weak loan numbers due to the microfinance segment. "We were cautious because we wanted to make sure that our portfolio remains pristine and we do not have large NPA flows," Kathpalia had told analysts in July.
However, analysts predict some pain on the asset quality front in Jul-Sept, with Kotak Institutional Equities estimating provisions will rise due to higher slippages from the microfinance portfolio, with overall slippages pegged at INR 18 billion. In Apr-Jun, IndusInd Bank reported fresh slippages of INR 15.36 billion, leading to provisions and contingencies rising 5.9% on year and 10.5% on quarter to INR 10.50 billion. As on Jun. 30, the gross non-performing asset ratio of the bank stood at 2.02% and the net NPA ratio was at 0.60%. According to KR Choksey, the bank's asset quality is expected to remain largely stable driven by decent recoveries and upgrades.
In addition to the microfinance segment, analysts are also eyeing the credit card space for stress in Jul-Sept. Kathpalia had said in July that the bank was seeing stress in credit cards. "In our portfolio we are seeing about 30 to 40 basis point stress emerging in the credit card. Whether it's seasonal, we have to wait and watch," he had said.
As on Jun. 30, the bank's gross NPA ratio for the cards segment had increased to 3.07% from 2.48% as on Mar. 31.
Following are the Jul-Sept earnings estimates for IndusInd Bank based on estimates compiled by Informist from 14 brokerage firms:
| BROKERAGE | NET INTEREST INCOME (in INR million) | NET PROFIT (in INR million) |
| Anand Rathi Share and Stock Brokers Ltd | 55,775.00 | 22,725.00 |
| Antique Stock Broking Ltd | 55,299.00 | 22,724.00 |
| Dolat Capital Market Pvt Ltd | 56,353.00 | 22,165.00 |
| Elara Securities (India) Pvt Ltd | 55,809.00 | 21,753.00 |
| Emkay Global Financial Services Ltd | 55,328.00 | 23,068.00 |
| IDBI Capital Market Services Ltd | 54,489.00 | 20,967.00 |
| Kotak Institutional Equities | 54,366.00 | 21,478.00 |
| KR Choksey Research | 56,028.00 | 22,225.00 |
| Motilal Oswal Financial Services Ltd | 54,522.00 | 20,652.00 |
| Nirmal Bang Equities Pvt Ltd | 55,793.00 | 23,808.00 |
| Nomura Equity Research | 55,000.00 | 20,900.00 |
| Prabhudas Lilladher Pvt Ltd | 55,547.00 | 22,053.00 |
| Sharekhan Ltd | 54,700.00 | 21,540.00 |
| YES Securities (India) Ltd | 56,097.00 | 23,341.00 |
| Average | 55,364.71 | 22,099.93 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vandana Hingorani
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