Private sector lender IndusInd Bank is expected to report over 150 percent growth in March quarter profit on account of lower provisions and low base in the year-ago period, but operating performance is expected to be weak.
Moderate loan growth may impact net interest income (NII), but strong deposits may support net interest margin for the quarter ended March 2021.
The bank reported a 3 percent year-on-year (YoY) as well as quarter-on-quarter (Q0Q) growth at Rs 2.13 lakh crore, while the deposits grew by 27 percent YoY and 7 percent QoQ to Rs 2.56 lakh crore with CASA ratio at 41.8 per cent in Q4 FY21 against 40.4 percent in Q4 FY20.
"We expect weak performance on operating metrics (down 5 percent YoY). Net interest margin (reported) is likely to be at 4 percent. We expect weaker performance on fee income growth. Deposit growth at 27 percent YoY is a positive, suggesting a comfortable environment to mobilize deposits for the bank," said Kotak Institutional Equities which sees 6.7 per cent year-on-year growth in net interest income.
"Disbursements had neared pre-COVID levels, though management commentary on growth outlook would be key to be watch," said ICICI Direct which expects NII to grow at 7.9 percent YoY.
Cost-to-income levels may remain at 41 percent and credit cost is expected to remain elevated at around 90 bps, the brokerage added.
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On the asset quality front, ICICI Direct feels the restructuring could be at around 1 percent with reported gross non-performing assets coming in at 2.9 percent for the March quarter.
According to brokerages, loan loss provisions could fall compared to the year-ago quarter but may remain elevated.
"We expect the bank to make higher provisions, some of it contingent on the MFI book. We are building in slippages of 5-7 percent. Commentary on commercial vehicle portfolio, final restructured loans book and guidance on credit costs for FY22 would be the key monitorables," said Kotak.