IndusInd Bank Q3 Result Preview-Loan growth expected to remain Healthy; deposit traction remains to be watched for
- Q3 Result Preview- IndusInd Bank is expected to see stable performance on the back of healthy loan growth. MOFSL estimates NII (Net Interest Income) for IndusInd Bank to rise 17.9% year on year ,while those at Kotak expect IndusInd Bank Net Interest Income to rise 15.2% year on year.
After disappointment with HDFC Bank performance, IndusInd Bank will be in focus ahead of earnings.
The December quarter's performance by Banks generally was being expected to be in line with the trend seen during the first half FY24.
Trends in operating profit growth was being expected to be weak, though analysts had expected earnings growth to have support from lower provisions. The provisional business data releases by a cross-section of banks suggests that loan growth has been ahead of deposit growth, said analysts at Kotak Institutional Equities in their Q3 preview report.
Asset quality is likely to remain in a sweet spot, leading to lower slippages, but recovery and upgrades was likely to lower as well, as per analysts. Kotak Analysts expect banks to report a 15-20 bps decline in NIMs. While loan yields have limited room for expansion as per them they are expecting deposit costs likely to re-price higher.
Q3 Financials- Expectations and estimates
Analysts at Motilal Oswal Financial Services (MOFSL) expect loan growth for IndusInd Bank to remain healthy. They expect asset quality to remain broadly stable and margins to remain stable for IndusInd Bank. The Credit cost is expected to witness a gradual moderation as PCR (Provisioning Coverage Ratio) remains healthy.
MOFSL estimates NII (Net Interest Income) for IndusInd Bank to come at around ₹5290 Crore, up 17.9% year on year while those at Kotak expect IndusInd Bank Net Interest Income to rise 15.2% year on year. The Net profit for IndusInd Bank is expected to rise 18.6% yoy as per MOFSL and 11% y-o-y as per Kotak Institutional Equities.
We believe that IndusInd Bank will continue to see growth momentum in its loan book in Q3FY24, largely driven by retail demand and healthy disbursements in the vehicle and microfinance business, said Shreyansh V.Shah, Research Analyst, StoxBox. Due to festive demand and recovery seen in the rural economy, the bank’s vehicle loan portfolio will have robust growth in Q3FY24.
With interest rates peaking, the bank may face NIM compression this quarter as per analysts. But Shah believes that the bank would end FY24 with NIM in the range of 4.2%-4.3% as they have enough levers to absorb the increase in the cost of funds. Also, Shah does not foresee any surprises in its asset quality from here on and expects credit costs to improve from Q3FY24 to around 115bps. He believe that the bank is poised to give a good set of numbers in this quarter as they have around Rs. 37,000 crores of excess liquidity for their disbursal and healthy deployment will aid in improving its return ratios in Q3FY24.
Factors to be watched for
One key factor to be watched for remains deposit traction as per MOFSL analysts.
A key discussion would be trends in deposit mobilization, as it has lagged loan growth, as per analysts at Kotak. This would have a bearing on our NIM forecasts, given the sensitivity of the policy rates on Net Interest Margins , they said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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.
- Top Gainers
- Top Losers
- 52 Week High