Leading private lender IndusInd Bank is expected to report a healthy growth in net interest income (NII) for the quarter ended December due to solid loan growth.
NII for the third quarter is likely to grow about 16% year-on-year, according to an average estimate of five analysts. NII growth is likely to be slightly slower than 18% posted in the previous September quarter.
On a sequential basis, NII would increase by a marginal 2%.
Furthermore, an average of four estimates from brokers indicates that the net profit in October-December is growing 11% per year.
The lender saw a 20% year-on-year growth in net advances in the third quarter at Rs 3.26 lakh crore, while deposits jumped 13% to Rs 3.68 lakh crore.
Non-interest income should be lower in the reporting period due to lower fiscal income and other fee income. Meanwhile, asset quality is expected to be broadly stable.
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Here’s what brokers expect from IndusInd Bank’s Q3
Kotak Equities
We expect a 2% YoY increase in PPOP (pre-provision operating profit), led by a lower contribution from non-interest income and higher operating cost growth.
We expect inventories to continue to decline, led by lower slippages and better asset quality trends. Both the MFI and vehicle finance portfolio show negligible risk. We are building slips of 1.7% (1400 crores). Key areas of focus would be the cost of finance and ability to sustain current levels of loan growth.
Motilal Oswal
Expect loan growth to remain healthy. Deposit withdrawals would be closely monitored. Expect asset quality to remain broadly stable. Wait for edges to be stable. Credit cost to attend gradual moderation, as PCR remains healthy.
Dolat
The Bank reported healthy loan growth at 4% QoQ / 20% YoY. Sequential NIM to be stable at 4.3%. With unlikely use of contingency buffers in Q3 (used Rs 1800 crore in Q2), sequentially higher credit cost by 130 bps to cap PAT growth. Build in RoA of 1.8%.
Read more: LTIMindtree Q3 results today: 5 things investors should watch out for
Nuvama
IndusInd Bank’s business update is healthier than peers but softer than Q2FY24. Loan growth is healthy at 3.6% QoQ although slower than 4.6% in Q2FY24. Deposit growth slowed to 2.6% QoQ versus 3.5% QoQ.
While CASA remained flat QoQ, retail LCR deposits grew 5% QoQ. Higher slippage and a reduction in the contingent provision buffer were two key concerns for IIB in the last three quarters. These will be incrementally positive in Q3FY24.
We expect a credit cost of 1.2% and do not expect the bank to draw further from the supply buffer. In Q2FY24, there was a net corporate slippage of Rs 200 crore. Even in Q3FY24 there could be a corporate slippage of Rs 100 crore. We expect total slippage to decrease QoQ.
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