IndusInd Bank Q1 preview: Profit may soar 48-49% YoY; NIM likely to stay flat sequentially

IndusInd Bank is likely to report a 48-49 per cent year-on-year (YoY) surge in net profit for the June quarter on a 13-14 per cent YoY rise in net interest income (NII). Net interest margin (NIM) may stay stable, said analysts, who believe investors would keenly track asset quality, particularly in the microfinance institution (MFI) book and also the outlook for the commercial vehicle (CV) segment.

ICICIdirect said the private lender reported robust business numbers with advances growing 18.4 per cent YoY to Rs 2.49 lakh crore and deposits rising 13.4 per cent YoY to Rs 3.03 lakh crore. A decline in credit cost to nearly 50 basis points is likely to boost profit after tax (PAT) by nearly 48 per cent YoY at Rs 1,451 crore, the domestic brokerage said.

"NII is expected to grow 14 per cent YoY to Rs 4,063 crore with NIMs expected to be flat QoQ while non-interest income is expected to grow 9.8 per cent YoY to Rs 1,955 crore. Cost to income ratio is likely to increase marginally QoQ to 45 per cent levels," ICICIdirect said.

In its earnings preview, Emkay Global expects IndusInd Bank to log a 49.4 per cent YoY rise in net profit at Rs 1,518.30 crore compared with Rs 1,016.10 crore in the same quarter last year. NII is seen growing at 14 per cent YoY to Rs 4,062.90 crore from Rs 3,563.70 crore in the year-ago quarter. It sees NIM at 4.2 per cent, the same as the March quarter but better than 4.1 per cent in the year-ago quarter.

"The bank clocked strong growth, mainly led by corporate/commercial banking, which should keep NIMs in check; slippages may moderate sequentially as stress formation in CV and MFI eases," Emkay said.

Post the lender's recent business update, Motilal Oswal Securities said the bank has continued to report a strong pick-up in loan growth and it expects this trend to remain healthy, which should support margins.

"Deposit franchise is growing steadily, with a sustained focus on ramping up retail deposits. An improvement in asset quality, particularly in the MFI book, and CV demand outlook will be key monitorables," Motilal said in a recent note.

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