Focus is on Building Provision Buffers:Indusind Bank (IIB) reported slightly subdued set of numbers. NII growth at 13percent was below normal run rate due to lower advances growth and fall in NIM.

Positioning itself for earnings consistency going ahead IndusInd Bank (IIB) reported earnings better than our estimates despite taking a stand to increase provisioning buffers so as to smoothen the earnings trajectory going forward. Since taking over, Sumanth Kathpalia has been clear about strengthening the balance sheet by maintaining higher provisions and the trend so far in terms of provisioning is a good indicator of delivering as per guidance. Net profit in 2QFY21 was down 52.7% YoY (up ~30% QoQ) due to higher provisions. Operating profit was up 8.7% YoY (down 2.6% QoQ) on the back of subdued net operating income growth (up 4.2% YoY, flat QoQ). NII growth stood at 12.7% YoY (down 1% QoQ), driven by advances...

has continued to record strong growth in treasury income. The loan growth of the bank eased to 2% end September 2020, driven by decline in the corporate loans, while retail loan book growth also eased in Q2FY2021. Stable asset quality: Bank has continued to maintain the asset quality stable in Q2FY2021. The fresh slippages of advances declined in Q2FY2021, while recoveries and upgradations remained strong. The restructured advance book of the bank was steady in Q2FY2021....

Provisioning was at | 1964 crore, down 13% QoQ, of which Covid-19 related provisions were at | 933 crore, taking outstanding Covid-19 provisions to | 2155 crore. PCR was at 77% for Q2FY21 vs. 67% in Q1FY21. As of September 2020, the bank held specific provisions for NPAs amounting to | 2646 crore and | 70 crore floating provisions apart from Covid-19 provision, taking provisions at 132% of GNPA. Loan growth remained flattish at 2.1% YoY, 1.6% QoQ as the bank looks to rebalance its loan portfolio. Hence, the corporate book fell 4.7% YoY. The...

IndusInd Bank's (IIB) Q2FY21 PAT at Rs 6.6bn (53% YoY) saw the impact of elevated provisions, as expected.

IIB reported a PAT of Rs6.63bn better than Q1FY20 but slightly lower than expectations (PLe: Rs8.5bn) as it continued to keep provisions on higher side related to COVID-19 (Rs9.5 bn). Few positives were (i) Deposits accretion was quite good with CASA growth of 8% QoQ (ii) PCR at 77% (pro-forma at 73%) and (iii) bank holds 118bps of loans as additional provisions (without standard assets). We get incremental comfort on improving collection efficiency with 94-95% in Sep and higher in Oct'20, though lagging in both MFI & some segments of VF. While, restructuring also is expected to be in...

IndusInd Bank (IIB) reported a stable 2QFY21 even as the bank continued to make higher provisions. Fee income picked up sequentially while margins were impacted due to excess liquidity. Loan growth was muted while the traction in garnering deposits stood strong. PCR improved sharply to 76.7%. The bank increased COVID-19 provisioning buffer to INR21.5b. IIB reported collection efficiency of ~95% for Sep'20. The bank has guided for a restructuring book of low single digits. We increase our estimates slightly factoring in the higher NII and...

Indusind Bank has reported better than expected numbers in 2QFY21, as it gross slippages declined at 3.9bn v/s 15.4bn in 1QFY21. The bank has reported provision expenses 19.6bn v/s 22.6bn in the previous quarter. The bank has made additional COVID provision of 9.55bn with addition to 11.9bn made in the previous two quarters. The total COVID provisioning stood at 21.55bn. The total contingent provision (excluding PCR) stood at 1.7% of loan book. Total loan loss provisions (cumulative, COVID and contingent) stood 130% of GNPLs and 3% of book. The bank's collection efficiencies have improved significantly (~95% as on Oct-20) and one of the best among large private banks. The capital infusion (post money CET 1: 14.5%) would provide further cushion....

Valuation and Risks: Despite concerns over near-term asset quality risks and impact of high credit costs on earnings, we believe all negatives and concerns are adequately priced incurrently as the stock is trading at historically low valuations.

is better placed to combat COVID and build a granular portfolio with sustainable growth. Additionally capital raise (32.9bn in 1QFY21 & 25bn in 2QFY21) will further boost the balance sheet. The pointers which acknowledge our conviction being: 1) Contingent provisioning (COVID + standard + floating & others) stood 1.2% of net advances and total provisioning (including cumulative) is at 2.5% of book, 2) Moratorium at 16% of the book is likely to reduce further, 3)...

We recommend a BUY on Indusind Bank with a Target Price of Rs 585, an upside of 12% from CMP of Rs 521 and Stop Loss Rs 490.

Cautious on lending, focusing on balance sheet granularity IndusInd Bank (IIB) reported operating profit growth of 13% YoY and 2.5% QoQ on the back of 16.4% YoY and 2.5% QoQ growth in NII and decline in opex (down 1% YoY, 11.4% QoQ) even as the loan book contracted by 4.2% QoQ. On YoY basis, the loan book grew by 2.4%. The strong NII growth came on the back of a healthy NIM of 4.28%, which expanded by 23bps YoY and 3bps. This is despite the fact that the balance sheet liquidity increased significantly. Deposit inflows were good as indicated by 5.3% QoQ growth, though the focus remained on accreting granular retail deposits by offering a higher rate. Going forward, the strategy is to improve balance sheet...

IIB's PAT of Rs4.6bn (PLe: Rs4.8bn) was marginally below estimates on higher than expected provisions mainly towards COVID related and enhancing PCR to 66%. As first time disclosures +50% of loan book was under moratorium 1.0 with retail being high at 75% which has come down to 16% in the extended moratorium upto Jun'20 and 19% in retail, while corporate book was at 9%. Bank has guided from their second stress test it is likely to see additionally 90bps higher than stress test 1.0 and 60bps credit cost incrementally. Overall collection in MFI has reached to 86% and other...

The bank said 16% of the book (including MFI) was under moratorium as on June 2020 as compared to low single digits of morat book during March 2020. In addition, the bank said 90% of Moratorium 2.0 is derived from Moratorium 1.0 with 90% of the Morat 2.0 book being secured. In terms of morat breakup, 19% of retail book (~| 22200 crore) and 9% of corporate...

28 July 2020 IndusInd Bank (IIB) reported a stable quarter as lower fee income and higher provisions (credit cost of 4.5% annualized) impacted earnings. On the other hand, lower opex and modest improvement in margins were a surprise. PCR improved to 66.6%, while the bank increased the COVID-19 provisioning buffer to INR12b. Loan growth remains under pressure, while deposit growth is showing signs of stabilizing. The moratorium book has also declined to ~16% at Jun20-end from ~50% as of Apr20-end; the bank suggested GNPA / credit cost impact of 92b/65bp due to COVID-19. We largely maintain our estimates as softness in other income is compensated by lower opex and provisions. Maintain IIB reported PAT of INR5.1b (-64% YoY/+62% QoQ), affected by lower fee income and higher provisions of INR22.64b (credit cost stood at 4.5% annualized). The increase in provisions was on account of the bank creating INR9.2b COVID-19 provisions. NII grew 16% YoY to INR33.

IndusInd Bank's (IIB) Q1FY21 PAT of Rs 5.1bn beat our estimate of Rs 3.8bn on better NII growth, stable NIMs and higher treasury gains.

IndusInd Bank has recorded sharp decline in the net profit to Rs 301.84 crore in the quarter ended March 2020 (Q4FY2020) from Rs 1300.20 crore in the previous quarter and Rs 360.10 crore in the corresponding quarter of last year, due to sharp increase in provisions. The fresh slippages of loans remain elevated leading to sharp increase in provisions for bad debt to Rs...

IIB may face serious near-term challenges- (1) asset quality risks stemming from its exposure to risky sectors (microfin., telecom, NBFCs, CRE etc.) and (2) scaling its granular deposit base. Higher provisions on anticipated stress will dent RoE. Together with heightened systemic risk, these underpin our measly assigned multiple (1x FY22E ABV). IIBs 4QFY20 net earnings (-76.8% QoQ) were below estimates (-20%), due to higher provisions. The rise in GNPAs was limited by higher w/os. Sequential NIM improvement was a positive surprise. Maintain ADD with a TP of Rs 575 (1xMar-22E ABV of Rs 575).