IndusInd Bank, which is set to announce its September quarter numbers later in the day, is likely announce double digit year-on-year ((YoY) growth in net interest income (NII), along with a strong growth in profit.
Analysts tracking the private lender have projected 15-20 percent YoY growth in NII for the Q2FY23. According to their estimates, the bank's profit growth is likely to be in the range of 50-65 percent YoY. Sequentially as well, the growth is expected to be strong, they said.
“Expect growth in NII at 17.4 percent YoY, net profit at higher double digit growth at 57.9 percent due to lower provision YoY,” said IDBI Capital. “Expect advances growth of 17.6% and strong deposits growth at 14.7 percent.”
In a company update released earlier this month, the lender said its advances grew 18 percent year-on-year and 5 percent quarter-on-quarter, beating most peers. Advances stood at Rs 2,59,647 crore as of September as against Rs 2,20,808 crore an year ago.
Deposits with the bank rose 15 percent YoY from Rs 2,75,473 crore to Rs 3,15,824 crore as of September 2022. It was a 4 percent on-quarter rise, the bank said.
“Retail deposits and deposits from small business customers amounted to Rs 1,29,895 crore as of September 30 as against Rs 1,24,102 crore as of June 30,” the company had said in a regulatory filing.
Kotak Securities expects weak operating profit growth (nearly flat YoY), led by lower contribution from treasury. Reported net interest margin (NIM) is likely to be stable at 4 percent while non-interest income would be subdued due to lower treasury income, it said.
“We expect provisions to keep declining, led by lower slippages and better asset-quality trends. We are building slippages of about 3 percent (Rs1800 crore),” the broker said in a note.
The stock has already reacted positively on its Q2 credit and deposit growth update. The counter is up 26 percent so far in this calendar year. It traded marginally in red at Rs 1218 per share on October 19 ahead of earnings announcement.
Phillip Capital, another Mumbai-based broker, said NIM to witness tailwind from microfinance growth. The performance of restructured portfolio and flow of non-performing asset (NPA) would be key factors to watch.
Kotak Securities that sees return on equity (RoE) at about 14.5 percent this quarter, said recovery in normalized return ratios would be the key monitorable as asset-quality concerns are abating quickly.
Key things that analysts are tracking:
-Performance of microfinance and vehicle finance
-Asset quality of retail segments
-Update on the new business segment.
-Normalization of RoE trends.
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