IndusInd Bank posts robust Q3 numbers
Vidrum / 11 Jan 2012
On Jan 10, 2012, IndusInd Bank kick-started the Q3 FY12 results in the banking space. The bank posted a strong set of financial numbers, which resulted in the scrip moving northwards. The scrip closed 6.19% up yesterday, and today too, it closed 4.50% higher at Rs 272.60. The bank's Net Interest Income increased by 19% to Rs 430.65 cr and its Net Profits jumped by 34% to Rs 205.96 cr on a YoY basis.
Key Financial Parameters
| Particulars (Rs/Cr) | Q3FY12 | Q3FY11 |
| Net Profit | 205.96 | 153.86 |
| CASA (%) | 26.52 | 26.8 |
| NIM (%) | 3.25 | 3.61 |
| CAR (%) | 13.43 | 15.61 |
| Provisions | 42.83 | 56.19 |
| Gross NPA (%) | 1.02 | 1.21 |
| Net NPA (%) | 0.29 | 0.36 |
| Return on Assets (%) | 1.55 | 1.55 |
| Revenue | Operating Profits | |||||
| Segment (Rs/Cr) | Q3FY12 | Q3FY11 | % Change | Q3FY12 | Q3FY11 | % Change |
| Treasury Operations | 383.19 | 248.59 | 54.15 | 26.46 | 52.61 | -49.71 |
| Retail Banking | 864.44 | 605.83 | 42.69 | 232.42 | 179.66 | 29.37 |
| Wholesale Banking | 626.65 | 378.58 | 65.53 | 109.72 | 76.36 | 43.69 |
| Other Banking Operations | -1.11 | -1.41 | -21.28 | -0.32 | -0.39 | -17.95 |
| Less Inter segment | -218.31 | -120.73 | 80.82 | |||
| Unallocable | -19.04 | -17.06 | ||||
| Total | 1654.86 | 1110.86 | 48.97 | 349.24 | 291.18 | 19.94 |
In Q3 FY12, the bank's core fee income jumped 46% to Rs 250 cr on a YoY basis. Of this, the income from foreign exchange and distribution income rose sharply by 84% and 65% respectively.
As on Dec 31, 2011, the advances of the bank grew by 30% to Rs 32426 cr on a YoY basis. This was on the back of growth in its Consumer Finance category, which contributes 48% of the total advances. The demand for commercial vehicles, and of loans for 2 and 3-wheelers etc. continued to grow higher for the bank. The bank has maintained its credit growth target for FY12 in the range of 25%-30%.
On the other hand, the total deposits grew at the rate of 32% to Rs 40558 cr on a YoY basis. This was on the back of a sharp increase in savings deposits, as the bank deregulated its savings interest rate. In Q3 FY12, the savings account balance of the bank increased by 54% on a YoY basis and by 21% on a QoQ basis.
The Net Interest Margin (NIM) of the bank contracted by 36 bps to 3.25%, and sequentially, it decreased by 10 bps. Its Capital Adequacy Ratio (CAR) stood at 13.43%, of which the Tier 1 capital stood at 10.70%, which is way above the RBI's comfort zone.
The assets quality of the bank improved further in Q3 FY12. The Gross NPAs decreased by 19 bps to 1.02%, while the Net NPAs decreased by 7 bps to 0.29%.
Its wholesale banking business grew at 65% to Rs 626 cr, while the profits from the same segment grew by 43% to Rs 109 cr. However, it was shocking to see that even though the revenue from the Treasury increased by 54% to Rs 383 cr, the bank's profits from the segment decreased by as much as 50% to Rs 26 cr. Normally, with bond yields softening, the bank would have made profits in its bond portfolio. However, it posted a loss of 45% in segments like the money market, forex trading etc.
IndusInd Bank has lower exposure to sensitive sectors, which helps the bank as it needs to make less provisions. In Q3 FY12, its provisions decreased by 23% to Rs 43 cr on a YoY basis. The bank's exposure to the power sector is for working capital, and that too is around 1.97% of its total exposure. It has has a very less exposure to Kingfisher Airlines, and the management does not have significant worries on that front.
Overall, IndusInd Bank posted a good set of numbers. By FY12, it plans to expand its branch capacity to 400 from the existing number of 365. With the asset quality under control, strong credit growth and plans for robust savings deposit growth going forward, this scrip is a good grab. Further, we believe that with the interest rate cycle due to reverse soon, the bank will be benefitted, as its NIMs will start improving. One can invest in the scrip in the staggered manner.
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