Q3 preview: IndusInd Bank net profit may jump nearly 60% to Rs 1,850 cr on robust loan growth, improving NII

IndusInd Bank is expected to report a year-on-year double-digit growth in net profit and net interest income (NII) for the quarter ended 31 December 2022 with likely improvement in asset quality, according to a Zee Business research report.

The private lender’s profit after tax (PAT) may surge by 59.3 per cent to Rs 1,850 crore in the reporting quarter as compared to Rs 1,161.3 crore during the same quarter of the previous financial year.

PAT refers to the earnings after the income taxes are accounted for. It is the company's ability to generate a return.

Meanwhile, the NII is likely to grow by 17 per cent to Rs 4,440 crore versus Rs 3793.6 crore in Q3FY22.

Also Read: Indusind Bank to ride on loan growth; brokerages bullish on stock, recommend buy

With respect to asset quality, the bank’s gross non-performing assets (NPAs) may improve to 2 per cent in Q3 from 2.11 per cent in the previous quarter, while the net NPAs is estimated to be marginally better at 0.5 per cent from 0.61 per cent quarter-on-quarter.           

Similarly, slippages and provisioning are also expected to decline in the December quarter.

There could be a possible improvement in the micro-finance and vehicle finance business of the mid-tier bank.

Treasury income is likely to be a dampener in reducing net interest margin (NIM) and non-interest income due to lower treasury income.

Also Read: HDFC Bank vs ICICI Bank vs Axis Bank vs Indusind Bank: Which stock offers more value for your buck?

In line with Zee Business expectations, several brokerages are of the view that IndusInd Bank may post strong numbers in the quarter ended December 31, 2022.

Brokerage firm ICICI Securities estimates IndusInd Bank charting a 2-year loan growth target of 15-18 per cent and revival in MFI, encouraging growth in corporate lending and strong momentum in retail is expected to drive loan growth beyond the guidance for Q3.

With an uptick in collection efficiency, and lesser flow-through from the restructured pool, the brokerage expects incremental stress to moderate and gross NPAs too to further settle lower.

Analysts at KRChoksey Research believe NIMs are likely to be stable with NII growth of 19.8 per cent YoY and asset quality to remain steady with moderation in slippages. Similarly, the cost-to-income ratio will likely be at 43.7%, it said expecting 56.3% YoY growth in Q3 profit.

IndusInd Bank shares on Tuesday closed among top laggards, down 0.6 per cent to Rs 1,231.50 per share on the NSE.