According to average estimates of five brokerages surveyed by Moneycontrol, IndusInd Bank expects net profit to grow 54 per cent year-on-year to Rs 1,315 crore for the quarter ended December. Brokerage houses expect the Mumbai-based bank’s net profit to rise in this quarter despite fears of higher slippage in the microfinance lending book.
“We expect the bank to make higher provisioning and most of it will be provisioning for the MFI book,” brokerage firm Kotak Institutional Equities said in a preview note.
Provision is the amount that banks set aside to cover losses from the loan account.
Brokerage firm Morgan Stanley expects total slippage to come down to Rs 1,750 crore from Rs 2660 crore for the quarter ended September as the non-MFI loan book is likely to remain healthy.
“On asset quality, particularly in the pre-MFI business, we expect the bank to perform well with relatively low slippage and reduction in credit costs,” Morgan Stanley said in a preview note.
The difference between the bank’s net interest income, interest income earned from lending and interest paid to depositors is expected to increase by 10.5 per cent year-on-year to Rs 3,762.8 crore in the December quarter while overall loan growth in the quarter 10 percent may remain.
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Analysts expect the bank to post a net interest margin of 4-4.1 per cent as compared to 4.12 per cent in the year-ago quarter.
On the operations front, analysts expect a sluggish quarter from the bank. IndusInd Bank’s pre-provision operating profit may grow only 3.4 per cent to Rs 3,075 crore in Q3 on account of weak earnings growth and higher costs.
The brokerage said investors would look forward to the management’s comments on the whistleblower case as well as the asset quality position on the microfinance lending book.
On January 28, IndusInd Bank shares closed at Rs 903.7 with a gain of 1.8 per cent on the National Stock Exchange.
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