MOSL: INDUSIND BANK (Buy)-Controlled opex supports operating performance- asset quality stable
IndusInd Bank: Controlled opex supports operating performance; asset quality stable
(iib IN, Mkt Cap USD17.4b, CMP INR1935, TP INR2250, 16% Upside, Buy)
- IndusInd Bank's (IIB) 1QFY19 PAT grew 24% YoY to INR10.4b (marginally below our estimate). NII rose 20% YoY, while the NIM moderated 5bp QoQ, driven by an increase in funding cost (+22bp QoQ).
- Total income grew 16% YoY due to muted other income (+12% YoY) on account of low treasury gains (INR1.37b v/s INR1.93b in 1QFY18). Core fee income grew 20% YoY, led by 32% growth in distribution income. Controlled opex growth of 12% YoY (CI ratio declined 80bp QoQ to 44.2%) led to PPoP growth of 20% YoY (+8% QoQ).
- Loan growth was led by robust growth in large corporates and small businesses, driving 30% YoY growth in the corporate portfolio. Consumer portfolio grew 28% YoY (+5% QoQ), led by strong traction in the CV loans, equipment financing and credit card segments. The share of retail loans to total book stands at 40% (46% if considered BBG as part of CFD).
- GNPA/NNPA increased 2.1%/2.2% QoQ. IIB sold INR1.49b of loans to ARCs. GNPA/NNPA ratios were in control at 1.15%/0.51% (-2bp/0bp QoQ).
- Other highlights: (1) Robust CASA accretion continued with 51% YoY S/A growth. (2) Tier-1 ratio declined 29bp QoQ to 14.3% (CET1: 13.2%).
IndusInd Bank's business lines include Corporate Banking, Retail Banking, Treasury and Foreign Exchange, Investment Banking, Capital Markets, Non-Resident Indian (NRI) / High Networth Individual (HNI) Banking, and (through a subsidiary) Information Technology. Co. provides multi-channel facilities including ATMs, Net Banking, Mobile Banking, Phone Banking, Multi-city Banking and International Debit Cards. Co. is part of Reserve Bank of India's Real Time Gross Settlement (RTGS) system. Co. has approximately 150 ATMs of its own, and has concluded multilateral arrangements with other banks with a total network of 15,000 ATM outlets.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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