NII is projected to grow 19 percent YoY to Rs 2,128 crore, a Reuters poll showed
IndusInd Bank is set to kick-off the earnings season for the banking sector on Tuesday. The Romesh Sobti-led bank, run by the Hinduja Group, is likely to report a 21 percent year-on-year growth in net profit at Rs 1,014.7 crore in the April to June quarter as compared to Rs 836.5 crore profit in the same period last year, according to a Reuters poll estimate.
Motilal Oswal expects synergies from the merger of IndusInd Bank with Bharat Financial Inclusion to help net profit grow over 46 percent. This will be the bank’s 41st quarter and profit is expected to rise on the back of healthy interest income and loan growth driven by retail loans.
The consistently well-performing bank had posted a net profit of Rs 953 crore for the fourth quarter ending March. Net interest income (NII), the difference between interest income a bank earns from its lending activities and the interest it pays to depositors, is projected to grow 19 percent YoY to Rs 2,128 crore, the poll showed.
Non-interest income is estimated to rise 8.5 percent YoY to Rs 1,266.5 crore in Q1 FY19. “We expect non-interest income to grow about 21 percent YoY, supported by healthy fee income growth," the brokerage said.
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"IndusInd Bank is likely to have a strong quarter with loan growth of 25 percent, backed by consumer lending and largely driven by commercial vehicle, tractors and car loans segment. It has also been growing its corporate loan segment selectively," Siddharth Purohit, Research Analyst at SMC Institutional Equities, said. He added that strong NII growth and core fee income together with lower credit cost should result in a 22 percent YoY growth in net profit.
Non-performing assetsGross non-performing assets (NPAs) may see a marginal uptick at 1.2 percent of total loans as compared to 1.1 percent a year ago. Sequentially, gross NPAs are likely to remain flat from the previous quarter at 1.09 percent, Motilal Oswal stated. Net NPAs, as part of total loans, may also inch up to 0.50 percent from 0.38 percent in the same quarter last year and 0.44 percent in the previous quarter.Provisions during the quarter are expected to increase a tad to Rs 321 crore from Rs 310 crore, according to a Reuters poll. On Monday, IndusInd Bank shares ended 0.22 percent lower at Rs 1,954.60 per share, as against a 0.78 percent gain for the Sensex.