IndusInd Bank Q3 Preview: NII growth seen strong, margin view mixed

Private sector lender IndusInd Bank is expected to report strong growth in income for the quarter ended December on the back of steady rise in loan book, but analysts’ view on the margin performance remains mixed.

In its quarterly update released earlier this month, the lender said that net advances increased 19% YoY to Rs 2.7 lakh crore at the end of December 31. Net deposits grew 14% YoY to Rs 3.25 lakh crore.

The private sector lender will release its earnings on Wednesday.

Following are the broad expectations of analysts:

Prabhudas Lilladher: The brokerage expects earnings to be driven by a decent loan growth of 16% YoY. It expects margins to be stable sequentially at 4.7%. With asset quality improving, the brokerage expects provisions to remain range bound. It expects net interest income to grow 16% YoY to Rs 4,409 crore.

Motilal Oswal Securities: While the brokerage expects loan growth to see a healthy pickup, it said that traction in deposits would need to be closely monitored.

It expects asset quality to remain under watch, with slippages from MFI and restructuring book to be key monitorables.

The brokerage expects net interest margin to remain under pressure at 4.1%, while credit costs to witness a gradual moderation as provision coverage ratio remains healthy.

Emkay Global Financial Services: The brokerage expects healthy loan growth, coupled with stable margins and contained provisions to support profitability of the lender. However, slippages are likely to remain elevated, given residual stress recognition in CV, MFI books. The brokerage expects net interest income to grow 18% to Rs 4,468 crore.

Sharekhan: The brokerage expects the lender to report a sharp 63% YoY rise in net profit for the quarter to Rs 1,887 crore. It expects net interest margin to decline sequentially, while

credit costs to witness a gradual moderation.

Key monitorables for the brokerage would be asset quality and collection efficiency for the MFI segment, demand environment in vehicle portfolio, and slippages from restructured book.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)