Earnings Outlook
IndusInd Bk PAT seen down 43% YoY on higher provisions
This story was originally published at 18:06 IST on 29 January 2025
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By Kshipra Petkar
MUMBAI – IndusInd Bank's profitability is seen to be limited due to lower income and higher provisions during the quarter ended December, according to analysts. The net profit of the bank for the reporting quarter is seen falling over 43% on year to INR 13.07 billion for Oct-Dec, according to the average of estimates from 14 brokerages. Sequentially, the bottom line is seen falling merely 1.4%. The bank is set to announce its results for Oct-Dec on Friday.
"We expect a disappointing performance on all metrics. Operating profit growth to slow down, led by weak loan growth (12% yoy, nearly 3% qoq) and pressure on revenue growth (NIM and fee income)," Kotak Institutional Equities said in its pre-earnings report. The net profit of the bank for the reporting quarter is seen in the range of INR 5.10 billion-INR 18.42 billion.
In Jul-Sept, the bank's provisions increased by 86.9% on year to INR 18.20 billion, which pushed down the bottom line by 39.50% on year to INR 13.25 billion. The bank had also made a contingent provision of INR 5.25 billion in Jul-Sept. "We expect provisions to increase sharply due to higher slippages from the MFI (microfinance) portfolio, but trends appear to be less worrisome as compared to other players," Kotak Institutional Equities said.
The asset quality of the bank will be keenly watched, reports said. In the previous quarter, the bank's asset quality worsened, with gross non-performing asset ratio increasing to 2.11% as of Sept. 30 from 2.02% reported a quarter ago and the net NPA ratio to 0.64% from 0.60% from a quarter ago. "Credit cost to stay more elevated vs peers led by higher delinquencies in MFI and credit cards," Nomura said in its pre-earnings report.
On Dec. 27, the bank invited bids for the sale of non-performing retail microfinance loans worth INR 15.73 billion through a public auction process. Any commentary on the bank's microfinance portfolio will be monitored.
The net interest income of the bank is seen rising by a mere 1.9% on year and around 1% on quarter to INR 53.94 billion for the quarter ended December, according to the average of estimates from 14 brokerages. The net interest margins of the bank are expected to moderate in the reporting quarter from 4.08%, as reported a quarter ago. Kotak Institutional Equities expects the margins to decline by 15 basis points on quarter.
According to the provisional figures released by the bank, the net advances were up 12% on year to INR 3.67 trillion as on Dec. 31 and the deposits were up 11% on year to INR 4.10 trillion. CASA ratio stood at 34.9% as on Dec. 31.
Analysts expect management commentary to be dominated by growth outlook, deposit mobilisation and credit cost normalisation. Since the bank announced its results for Jul-Sept, its shares have fallen nearly 9%. On Wednesday, the shares of IndusInd Bank closed 1.5% higher at INR 948.30 on the National Stock Exchange.
Following are the Oct-Dec earnings estimates for IndusInd Bank based on reports from 14 brokerage firms in descending order of the estimate of net profit:
| Brokerage Name | Net Interest Income (in INR million) | Net Profit (in INR million) |
| Nirmal Bang Equities | 55,306.00 | 18,421.00 |
| YES Securities (India) | 54,823.00 | 17,745.00 |
| Emkay Global Financial Services | 53,786.00 | 15,895.00 |
| IDBI Capital Market Services | 54,503.00 | 15,350.00 |
| Nomura Equity Research | 54,000.00 | 15,000.00 |
| Motilal Oswal Financial Services | 52,810.00 | 14,358.00 |
| Anand Rathi Share and Stock Brokers | 54,323.00 | 14,343.00 |
| Prabhudas Lilladher | 53,212.00 | 13,253.00 |
| Nuvama Wealth Management | 52,400.00 | 11,900.00 |
| Elara Securities (India) | 52,804.00 | 10,923.00 |
| JM Financial Institutional Securities | 55,884.00 | 10,552.00 |
| Systematix Shares and Stocks (India) | 52,807.00 | 10,126.00 |
| Sharekhan | 54,200.00 | 10,040.00 |
| Kotak Institutional Equities | 54,363.00 | 5,103.00 |
| Average | 53,944.36 | 13,072.07 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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