IndusInd Bank Q3- Material Rise In Cost Of Deposits Indicative Of Wholesale Deposit Dependence: Yes Securities

Yes Securities Report

IndusInd Bank Ltd.'s relatively conservative guidance is likely a tacit acknowledgement that liability retailisation is still work-in-progress. Share of liquidity coverage ratio retail deposits is still 42.4%, which is materially lower than key private sector peers.

Cost of deposits jumped 37 basis points QoQ in a sign of things to come, with management conceding there could be a similar rise in Q4.

What saved the day from net interest margin was a 151 bps rise in loan-to-deposit ratio to 83.9%, a non-structural factor aiding margin.

There were some elevated slippages in the commercial vehicle book due to some duties being rolled back in the state of Orissa. Microfinance non-performing loans have also moved up due to stress in the Eastern region and there would be another quarter of some pain before things stabilise.

The outstanding contingent provisions amounted to Rs 21.92 billion, with IndusInd Bank having utilised Rs 11.36 billion of contingent provisions so far. Outstanding loan-related provisions were 130% of gross non-performing asset.

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