Active Stocks
Tue Mar 19 2024 15:11:09
  1. Tata Consultancy Services share price
  2. 3,979.30 -3.99%
  1. Tata Steel share price
  2. 148.75 -0.57%
  1. Bharti Airtel share price
  2. 1,230.85 0.47%
  1. Power Grid Corporation Of India share price
  2. 258.75 -2.36%
  1. ITC share price
  2. 409.50 -1.89%
Business News/ Market / Mark-to-market/  IndusInd Bank’s big bad loan divergence foretells a painful bank results season
BackBack

IndusInd Bank’s big bad loan divergence foretells a painful bank results season

IndusInd Bank reported a doubling of slippages for the March quarter. Further, it said it had reported only half of the bad loans it had in 2016-17

Any more surprises and IndusInd Bank would lose the shine it has always had.Premium
Any more surprises and IndusInd Bank would lose the shine it has always had.

IndusInd Bank Ltd had one of those pristine loan books that investors covet, while bank after bank revealed worrisome decay in their portfolios. Not anymore.

The private sector lender on Thursday reported a doubling of slippages for the January-March quarter. Further, it said it had reported only half of the bad loans it had in 2016-17.

That a divergence in bad loan reporting should come from a clean lender like IndusInd Bank shows two things.

Firstly, for the lender itself, the divergence is not very large and does not show any intent of covering up asset quality.

Secondly, other banks, both in the private and public sectors, which have a bigger corporate book, will probably begin to show scary divergences as they detail their results in the coming weeks.

IndusInd Bank has fixed the divergence over the last year and the management stressed that credit costs are well within its guidance. Core performance continues to shine and the bank met Street estimates for both net profit and net interest income.

Given this, investors didn’t run down the stock much, as it ended merely 0.5% down mainly because of the divergence. At current levels, the stock is priced to perfection, trading at a multiple of five times its book value for 2017-18 and nearly four times that of 2018-19.

Any more surprises and IndusInd Bank would lose the shine it has always had.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 20 Apr 2018, 09:31 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App