Indusind Bank (Q2 FY14)

India Infoline News Service | Mumbai |

Credit expansion funded through borrowings; substantial improvement in savings deposit ratio

CMP Rs425, Target Rs505, Upside 18.9%

  • Loan growth decelerates to 24% yoy; retail loan growth falls to 18% yoy 
  • Credit expansion funded through borrowings; substantial improvement in savings deposit ratio 
  • Better-than-expected NIM performance was a positive surprise 
  • Buoyant fee growth; core C/I ratio improves further
  • Resilient asset quality performance continues
  • Maintain BUY with 9m target of Rs505; elevate IndusInd as top sector pick 
Result table
(Rs mn) Q2 FY14 Q1 FY14 % qoq Q2 FY13 % yoy
Total Interest Income 20,186 19,118 5.6 17,279 16.8
Interest expended (13,186) (12,327) 7.0 (12,182) 8.2
Net Interest Income 6,999 6,791 3.1 5,097 37.3
Other income 4,167 4,706 (11.4) 3,205 30.0
Total Income 11,167 11,497 (2.9) 8,302 34.5
Operating expenses (5,287) (5,085) 4.0 (4,104) 28.8
Provisions (889) (1,321) (32.7) (491) 81.1
PBT 4,991 5,092 (2.0) 3,708 34.6
Tax (1,688) (1,747) (3.4) (1,205) 40.1
Reported PAT 3,303 3,345 (1.3) 2,503 32.0
EPS 25.2 25.5 (1.3) 21.3 18.2

Business Mix (Rs mn) Q2 FY14 Q1 FY14 % qoq Q2 FY13 % yoy
Advances 489,680 474,250 3.3 394,270 24.2
Consumer Finance 241,660 233,550 3.5 204,340 18.3
% share 49.4 49.2 - 51.8 -
Corp & Comm Banking 248,020 240,700 3.0 189,930 30.6
% share 50.6 50.8 - 48.2 -






Deposits 530,580 556,600 (4.7) 477,650 11.1
Current 82,640 87,650 (5.7) 80,530 2.6
Savings 85,860 79,080 8.6 53,120 61.6
Term Deposits 362,080 389,870 (7.1) 344,000 5.3

Ratios Q2 FY14 Q1 FY14 chg qoq Q2 FY13 chg yoy
NIM (%) 3.7 3.7 (0.1) 3.3 0.4
Yield on Advances (%) 13.5 13.4 0.1 13.9 (0.4)
Cost of Deposits (%) 8.2 8.2 - 8.7 (0.5)
CASA (%) 31.8 30.0 1.8 28.0 3.8
C/D (x) 0.92 0.85 0.07 0.83 0.10
Non-interest income (%) 37.3 40.9 (3.6) 38.6 (1.3)
Non-int inc/Int exp (%) 31.6 38.2 (6.6) 26.3 5.3
Cost to Income (%) 47.3 44.2 3.1 49.4 (2.1)
Prov/Avg Adv (% Ann) 0.74 1.15 (0.41) 0.51 0.23
BV (Rs) 154.6 148.3 6.3 106.8 47.8
RoE (%) 16.7 17.6 (1.0) 20.5 (3.8)
RoA (%) 1.7 1.8 (0.1) 1.6 0.2
CAR (%) 14.6 15.0 (0.4) 11.8 2.8
Gross NPA (%) 1.1 1.1 0.1 1.0 0.1
Net NPA (%) 0.2 0.2 0.0 0.3 (0.1)
Source: Company, India Infoline Research

Loan growth decelerates to 24% yoy; retail loan growth declines to 18% yoy   
IndusInd Bank’s loan growth moderated to 24% yoy on the back of sharp growth deceleration in the retail segment to 18% yoy. The deceleration was more prominent in the products of CV financing (1% qoq/8% yoy), 3W financing (2% qoq/2% yoy) and equipment financing (1% qoq/15% yoy). Growth rate in UV financing (25% yoy v/s 34% yoy in Q1 FY14) and Car financing (31% yoy v/s 37% yoy in Q1 FY14) also came-off. The growth slowdown in entire vehicle financing portfolio is a result of weakening underlying volume growth and bank’s cautiousness in some segments in the wake of increasing macro stress.

Corporate and Commercial Banking book grew by 30% yoy driven by strong traction in mid corporate (34% yoy) and small corporate (37% yoy) portfolios. The overall loan mix of the bank stood at 49:51 between consumer and corporate segments. Over the past four quarters, the mix has moved 250bps towards the corporate segment with persistent moderation in the growth of consumer book. We estimate overall loan growth further moderating to 21% in FY14 and then improving to 24% in FY15.       

Credit expansion funded through borrowings; substantial improvement in savings deposit ratio 
Deposits shrunk by 5% qoq during the quarter as the bank was averse to raise or renew wholesale deposits at substantially higher rates caused by the exceptional liquidity tightening measures of RBI. Credit expansion was entirely funded by relatively cheaper borrowings which grew by substantial 80% qoq. Robust growth in savings deposits (9% qoq/62% yoy) continued and the ratio improved by 200bps qoq to 16.2%. Substantial branch addition in the past two years and
BSE 1,654.00 11.55 (0.70%)
NSE 1,650.35 2.95 (0.18%)

***Note: This is a NSE Chart

 

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