Private sector lender IndusInd Bank is expected to clock more than 50 percent year-on-year growth in standalone profit for the quarter ended September 2021 driven by downtick in provisions, and low base in year-ago period.
The stock price gained 34 percent in the last six months with improving credit offtake and collection efficiencies following the opening of economic activities. Let's see whether the September quarter earnings can help the bank continue its uptrend or not.
The bank had already disclosed some growth numbers earlier this month, saying loan book grew by 10 percent YoY (5 percent QoQ) to Rs 2.21 lakh crore and deposits rose by 21 percent YoY (3 percent) to Rs 2.75 lakh crore in the quarter ended September 2021 including retail deposits and deposits from small business customers of Rs 1.11 lakh crore.
Profit
"We expect steady earnings driven by base effect and lower provisioning as the bank is covered with a good provision coverage ratio of +70 percent," said Prabhudas Lilladher, which sees 91 percent year-on-year growth in profit and 36 percent decline in provisions YoY for the quarter.
KRChoksey Research expects substantial profits (up 72 percent YoY) on healthy operational income with a low-profit base of last year.
Net interest income and Non-interest income
The net interest income growth is expected to be in double digit with stable net interest margin and better loan growth for the quarter ended September 2021, while non-interest income growth is also likely to be in double digit, experts feel.
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"Net interest margins are expected to be stable," said KR Choksey, which sees 11.3 percent year-on-year growth in net interest income, and expects non-interest income to grow at 15 percent YoY on the low base of last year while a flat growth on a sequential basis.
ICICI Direct also feels IndusInd Bank is expected to post NII growth of 16 percent YoY, with NIMs to be around 5.2 percent, while non-interest income could be up by 17 percent YoY.
Asset Quality
KRChoksey expects gross non-performing assets (NPAs) to be slightly lower sequentially, on the back of a pickup in collection efficiencies.
Prabhudas Lilladher also said collection efficiencies have seen uptick, hence there could be better recovery prospects.
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