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IndusInd Bank Q3 preview | PAT to rise 54% YoY but MFI business may struggle

The rise in net profit of the Mumbai-based bank may come despite fears of higher slippages in the microfinance lending book amid whistleblower complaints against the lender of evergreening loans at its MFI subsidiary.

Mumbai / January 29, 2022 / 10:30 AM IST
 
 
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IndusInd Bank is expected to report a 54 percent year-on-year rise in net profit to Rs 1,315 crore for the quarter ended December, according to an average of estimates from five brokerages polled by Moneycontrol.

The rise in net profit of the Mumbai-based bank may come despite fears of higher slippages in the microfinance lending book in the quarter amid whistleblower complaints against the lender of evergreening loans at its MFI subsidiary.

“We expect the bank to make higher provisions and most of it would be provisions for the MFI book,” said brokerage firm Kotak Institutional Equities in a preview note.

Provision is the amount banks need to set aside to cover the losses from a loan account.

Brokerage firm Morgan Stanley expects the overall slippages in the quarter to decline to Rs 1,750 crore from Rs 2,660 crore in the three-month period ending September as non-MFI loan book is likely to do well.

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“On asset quality, particularly in ex-MFI business, we expect the bank to do well with relatively lower slippages and moderation in credit cost,” Morgan Stanley said in a preview note.

The bank’s net interest income, the difference between the interest income it earned from lending and the interest it paid to depositors, in the December quarter is likely to rise by 10.5 percent on-year to Rs 3,762.8 crore, with overall loan growth in the quarter seen at around 10 percent.

Analysts expect the lender to report a net interest margin of 4-4.1 percent as compared to 4.12 percent in the year-ago quarter.

On the operating front, analysts expect a muted quarter from the bank. IndusInd Bank’s pre-provision operating profit is seen rising merely 3.4 percent on-year to Rs 3,075 crore in the reported quarter due to weak revenue growth and elevated costs.

Brokerages said investors will awaiting the management’s commentary around the whistleblower case as well as the asset-quality situation on the microfinance lending book.

On January 28, shares of IndusInd Bank ended 1.8 percent higher at Rs 903.7 on the National Stock Exchange.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Chiranjivi Chakraborty
first published: Jan 29, 2022 10:30 am
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