Institution of high growth to continue in IndusInd bank: IIFL

IndusInd Bank's profit has risen by 26 percent in the first quarter of FY17 (Y-o-Y). Gross non-performing assets saw a slight increase at 0.94 percent from 0.87 percent, last year same time. Shweta Daptardar of KR Choksey said that the earnings of the bank is in line with the estimates owing to strong net interest margin (NIM) traction at 3.97 percent against 3.94 percent, last year same period. "Decreasing costs of deposits; higher share of fixed rate loans; and high-yielding consumer finance portfolio helped the bank achieve this result," she added.  Rajiv Mehta of IIFL said that the numbers were robust and stable on every front."Institution of high growth to continue in the bank and we look forward to it," he said.   The bank has made a provisioning of Rs 230 crore, and Mehta maintained that he doesn't see the credit cost surpassing that of last year's, going forward. Below is the verbatim transcript of Shweta Daptardar and Rajiv Mehta's interview to Sonia Shenoy, Anuj Singhal, Ekta Batra and Abhishek Kothari on CNBC-TV18. Sonia: What are your initial thoughts on IndusInd Bank numbers? Daptardar: Good set of numbers; very much in-line with our estimates. We were estimating Rs 667 crore PAT and what is reported is Rs 661 crore primarily driven by strong net interest margin (NIM) traction. Primarily NIMs we were actually expecting to be on the higher side, so, 3.97 percent net interest margin is a very good number vis-à-vis 3.94 percent. Even the management mentioned it has come because the cost of deposit have looked down especially we are in a falling interest rate regime so a lot of benefits come on that front. Plus they have higher share of fixed rate loans that helps in terms of NIMs traction and last but not the least the high yielding consumer finance division portfolio which has been NIM accretive. So, all-in-all, good set of numbers also because the gross non-performing assets (GNPA) which we saw slight deterioration in GNPAs, around 0.91 percent vis-à-vis 0.87 percent but we are not unduly worried. We had this diamond portfolio concerns on our radar but like management rightly mentioned that portfolio has been performing exceedingly well. Anuj: Your first thoughts on IndusInd Bank numbers? Numbers look quite stable. The stock hasn't done much, in fact has come off the highs. Mehta: Yes, true. Overall the numbers were quite robust on every count. The loan book grew by 30 odd percent which is slightly ahead of our expectations. But profitability growth was pretty much in the range of what we were expecting. If you look at the qualitative performance analysis also if we do it has more or less panned out in the way which all of us expecting it to be. So, they have made progress on Current Account, Savings Account (CASA), net interest margins (NIM) and in terms of asset quality it is quite stable. Just for that additional provisions they have to do which is more regulatory in nature in any bank specific issue. So, overall robust performance by the bank and the executions of the high growth by the bank continues and that also continues to impress us and what we look forward to in the bank. Ekta: How have you read the provisions. Does that make you a little uncomfortable? Mehta: As I said I am not really too perturbed about the aggravating number given the fact that there is an additional amount of Rs 35 odd crore. So, lot of other banks will also have to provide. So, on a relative basis it is not actually concerning. Otherwise if you look at the trend yes, overall in terms of absolute numbers gross non-performing asset (NPA) have been going up marginally. But if you look at it in context of the overall asset growth that this bank has been executing the credit cost per se is actually not inching up and from the bank had also guided in the last quarter with regards to the overall guidance for the current year they are looking at slightly moderated credit cost in the current year. I think the credit cost for the quarter falls in line with that guidance and we don't see so far any reason that the credit cost will surpass the last year number.