IndusInd Bank - Q2FY21 First Cut - ICICI Securities

(CMP - Rs. 585, MCap - Rs. 44298 crore)

Subdued overall performance with some improvement in the asset quality.

Q2FY21 Earnings Summary

- IndusInd Bank posted a subdued operating performance with net interest income declining by 0.9% sequentially to Rs. 3278 crore as a result of QoQ decline in net interest margin and flattish growth in advances. NIMs contracted by ~12 bps to 4.16% as a result of steeper decline in yield on assets (down 28 bps QoQ) as compared to cost of funds (down 16 bps QoQ), led by excess liquidity. Other income also witnessed tepid growth of 2.3% QoQ to Rs. 1554 crore. Cost-to-income ratio remained largely stable at 41.4% on QoQ. Provisions declined by 13% QoQ to Rs. 1964 crore, while net profit stood at Rs. 647 crore as against Rs. 460 crore in the previous year quarter

- Accounts worth Rs. 399 crore slipped into NPA category during the quarter as compared to Rs. 1537 crore in the previous quarter. Overall asset quality showed improvement as GNPA and NNPA ratio declined by 32 bps and 34 bps to 2.21% and 0.52% respectively. On a standstill asset classification basis, asset quality performance was positive as GNPA and NNPA accordingly stood at 2.32% and 0.61% for Q2FY21. As on September 2020, loans amounted to Rs. 17617 crore moratorium was extended. Collection improved to 94.7% for the month of September 2020 with collection in micro finance book at 91%. Management has indicated that restructuring should be low single digit number as percentage of advances

- Provisioning for the quarter stood at Rs. 1964 crore (down 13% QoQ). In the wake of Covid-19 pandemic, the bank has provided Rs. 952 crore as floating provisions during Q2FY21 taking total Covid-19 provisions to Rs. 2155 crore. Total PCR stood at 77% for Q2FY21 vs 67% in the previous quarter

- Credit growth was subdued at 2.1% YoY to Rs. 201247 crore, mainly due to 4.7% YoY slump in corporate book while consumer finance book growth remained modest at 7.8% YoY. Deposit growth for the quarter stood at 10.2% YoY to Rs. 227884 crore, with CASA deposits growing by 7% YoY, CASA ratio improved by ~30 bps QoQ to 40.3%, however, down ~15 bps on yearly basis

- The bank has strengthened its capital position by adding Rs. 3288 crore to its kitty. CRAR for Q2FY21 stands at 16.55% versus 15.16% sequentially

We will be coming out with a detailed report soon.

Shares of INDUSIND BANK LTD. was last trading in BSE at Rs.585.6 as compared to the previous close of Rs. 588.7. The total number of shares traded during the day was 745533 in over 18388 trades.

The stock hit an intraday high of Rs. 601.95 and intraday low of 576.55. The net turnover during the day was Rs. 439499330.

Source : Equity Bulls

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