IndusInd Bank Q3 Results Review - Delivering On The Guided Path: ICICI Securities
IndusInd Bank has reported 1.87% return on asset and more than 15% return on equity in Q3 FY23.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
IndusInd Bank Ltd. has reported 1.87% return on asset and more than 15% return on equity in Q3 FY23, thereby improving visibility of it being able to deliver more than 5% pre-provision operating profit/loans, 1.9% RoAs and 16% RoEs by FY24E.
What surprised positively-
Despite flat micro finance institution portfolio, acceleration in retail advance growth to 18.4% YoY (versus 13.7% / 12.9% / 6.6% in Q2/Q1 FY23 / Q4 FY22) aided overall advance growth at 4.6% QoQ and 19% YoY. Broad-based and highest ever vehicle finance disbursements (up 19% QoQ / 44% YoY) reinforced growth in vehicle financing portfolio at 6.7% QoQ / 18% YoY.
Credit card portfolio on a low base scaled up 8.7% QoQ / 45.5% YoY and business loan/personal loan/affordable housing was up 12.7% QoQ /46.7% YoY. Corporate loan book was up 4% QoQ/20% YoY led by 11% QoQ growth in small corporates.
What was not encouraging-
MFI portfolio was just flat QoQ lagging an improvement (up 8% YoY). MFI gross non-performing asset also rose to 3.75% versus 2.91%. Management expects it to normalise in one-two quarters.
Despite utilising contingency buffer of Rs 4.6 billion, credit cost settled at 1.6%. Credit cost guidance of 1.2-1.5% through FY23 seems stretched now.
What to expect going forward-
IndusInd Bank is now carrying provisioning of 2.7% against stress pool (NPA plus restructuring plus special mention account-I/II plus net SRs) of 4.3%, which suggests credit cost trajectory should normalise to less than 1.7%. This may be partially offset by pressure on net interest margins given the dominance of fixed-rate portfolio and focus on retail term-deposit mobilisation.
Click on the attachment to read the full report:
More Research Reports On IndusInd Bank's Q3 FY23 Results Reviews
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.