IndusInd Bank Q2 earnings: Lender likely to record 65% profit growth

New Delhi: Analysts and brokerages expect IndusInd Bank to report robust growth in September quarter profit, supported by a surge in net interest income (NII), loan growth and pre-provisioning operating profit (PPOP). A reduction in corporate tax rate is also positive for the bank.

However, the numbers may not be fully comparable given the merger with Bharat Financial with effect from July 4. “Loan growth is expected to moderate around 20-22 per cent given some slowdown in vehicle financing (though it is gaining market share). The bank management has highlighted exposure to the most-talked stressed groups, but any incremental addition or provisioning towards the same will keep credit cost volatile (though not expected to be more than 15-20 bps off),” Edelweiss Securities said in a note.

The brokerage expects core PAT to grow 65 per cent YoY to Rs 1,520 crore from RS 920 crore in same quarter of last financial year. It expects 35 per cent YoY NII growth at Rs 4,756 crore..

IndusInd Bank's advances growth is seen at 24.2 per cent YoY at Rs 2.02 lakh crore, though the numbers are not comparable YoY owing to the merger of Bharat Financial Inclusion, ICICIdirect said.

“The auto segment is expected to witness pressure given the slowdown in sales volumes. Further, a cautious approach in unsecured retail lending is likely to impact growth, which will be offset by an uptick in micro-finance loans,” the brokerage said.

On the operational front, the brokerage sees 66 per cent PAT growth at Rs 1,529 crore. With its exposure to the recently cropped up stressed assets being classified as standard, the GNPA ratio is seen steady at 2.18 per cent and credit cost at 30 bps of advances, ICICIdirect said.

Kotak Securities expects stable performance on operating metrics. “Loan growth will be ~28% YoY while net-interest margin (NIM) is likely to be flat with the benefit of lower cost of funds, offset by a pressure on lending yields.”

The brokerage expects the bank to make higher provisions, especially with the benefit of a lower tax rate. Asset quality on CV portfolio would be a key monitorable. Kotak will look forward to their guidance on credit costs given the exposures they have to select companies that are currently under stress.

It projects a 56 per cent annual growth in adjusted profit at Rs 1,439 crore, nearly the same as June quarter. It expects NII at Rs 2,895 crore, a 31 per cent jump YoY.

Reliance Securities expects margins to benefit from a decline in wholesale deposit rates and a large fixed rate (40 per cent of loans) portfolio in a declining rate environment. It pegs PAT for the lender at Rs 972 crore, up 5.6 per cent YoY and down 32 per cent QoQ. The brokerage expects NIM at 4.4 per cent for September quarter.