IndusInd Bank is on track for a strong third quarter, with a projected 16% year-on-year (YoY) increase in net interest income (NII), and a 20% YoY rise in net profit, according to a report published on Tuesday. The bank's loan and deposit growth for the quarter are reported at 4%, while its YoY loan growth stands at 20%. The bank's deposit growth remained stable at 15% YoY.
The bank's asset quality is expected to remain steady with provisions anticipated to decline further in the second quarter due to fewer slippages. In the first quarter, IndusInd Bank reported a net profit surge of 32% YoY to INR 2,124 crore ($282 million), and an NII increase of 18% YoY to INR 4,867 crore ($646 million).
However, the bank's pre-provision operating profit (PPOP) is forecasted to rise by only 8% YoY due to lower non-interest income, slower NII growth, and higher operating costs. The core PPOP is expected to grow by 3% quarter-over-quarter (QoQ).
The bank's net interest margin (NIM) is projected to drop by 10 basis points (bps) to 4.2%, with an expected margin contraction of 12bps. The return on equity (RoE) is anticipated to be at 15% in the second quarter of the fiscal year 2024. The microfinance institution (MFI) and vehicle finance portfolios are showing negligible risk, with slippages of 2% (INR 1400 crore or $186 million).
Key focus areas for the bank include managing the cost of funds, maintaining deposit traction, moderating credit cost with an uptick of 8bps, and achieving superior industry loan growth at 4.5% QoQ. These factors combined indicate a promising outlook for IndusInd Bank in the upcoming quarter.
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