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IndusInd Bank (IIB) FY11 & Q4FY11 interest income showed a
robust growth on account of growth in core interest income.
Interest income grew by 32.6% y-o-y in FY11 & 45.6% y-o-y in
Q4FY11 due to better yield on CF business. CASA grew at a
robust 47.6% y-o-y in FY11 & 13.6% Q-o-Q. The business of IIB
recorded a strong growth of 28.1% y-o-y in FY11 and by 8.7% Qo-
Q. The yield on advances of IIB improved by 50bps in FY11 to
12.14% on account of the increase in share of the high yielding
CF business. The NIM of the bank improved from 3.16% in FY10
to 3.78% in FY11. The FY11 results were more or less in line
with our expectations. We maintain our “Buy” rating on the
stock.
Strong business growth
The business of IIB recorded a strong growth of 28.1% y-o-y in FY11
and by 8.7% Q-o-Q. The deposits of the bank grew by a healthy
25.3% y-o-y & by ~12.1% on a sequential basis. The advances of IIB
grew by a healthy 27.3% y-o-y in FY11 & by 4.7% on a Q-o-Q basis.
The credit-deposit ratio of IIB decreased from 76.9% in FY10 to
76.1% in FY11. In Q3FY11, the CD ratio was at 81.5%.
Robust growth in net interest income
Net interest income (NII) of IIB showed a robust growth of 55.3% in
FY11, slightly better than our expectation due to increase in the
high yielding CF business and robust growth in CASA. The CF
business now stands at 44% of the total as against 40% last year. IIB
also re-priced some of its corporate advances which helped them
get a better yield during the year. CASA on the other hand
improved from 23.7% in FY10 to 27.2% in FY11. The growth in CASA
was more on the SA side, which grew by a robust 59.7% y-o-y in
FY11 and CA grew by a healthy 42.3% y-o-y in FY11. This led to a
robust growth in NII which stood at Rs.13.77 bn in FY11 as against
Rs.8.86 bn last year.
Consistent improvement in NIM and return ratios
IIB’s Net Interest Margin (NIM) improved to 3.78% in FY11 from
3.16% in FY10. The improvement in NIM was mainly on account of
increase in the share of CF business. While the corporate book
increased by ~18% in FY11, CF book increased by ~41.4% in FY11.
For FY11, the RoAA was better than our expectations at 1.46%
(against 1.41% expected) & RoAE was also ahead of our
expectations at 19.3% (against 18.7% expected).
Asset quality under control
The asset quality came in as a surprise. Though we expected a
slight increase in the NPA’s due to the shift towards CF business,
the bank was able to keep the asset quality under check. The
GNPA decreased from 1.23% in FY10 to 1.01% in FY11 & NNPA
decreased from 0.5% in FY10 to 0.28% in FY11. The PCR was at
72.6% as against 60.1% last year. The credit cost for the bank
decreased by 18bps from 0.79% in FY10 to 0.61% in FY11.
Valuation
Currently at Rs.285, the stock is available at price to adj book
value (P/ABV) of ~2.5x of FY13E. We maintain our “Buy” rating
with a price target of Rs.328, an upside of ~19% from the CMP.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IndusInd Bank (IIB) FY11 & Q4FY11 interest income showed a
robust growth on account of growth in core interest income.
Interest income grew by 32.6% y-o-y in FY11 & 45.6% y-o-y in
Q4FY11 due to better yield on CF business. CASA grew at a
robust 47.6% y-o-y in FY11 & 13.6% Q-o-Q. The business of IIB
recorded a strong growth of 28.1% y-o-y in FY11 and by 8.7% Qo-
Q. The yield on advances of IIB improved by 50bps in FY11 to
12.14% on account of the increase in share of the high yielding
CF business. The NIM of the bank improved from 3.16% in FY10
to 3.78% in FY11. The FY11 results were more or less in line
with our expectations. We maintain our “Buy” rating on the
stock.
Strong business growth
The business of IIB recorded a strong growth of 28.1% y-o-y in FY11
and by 8.7% Q-o-Q. The deposits of the bank grew by a healthy
25.3% y-o-y & by ~12.1% on a sequential basis. The advances of IIB
grew by a healthy 27.3% y-o-y in FY11 & by 4.7% on a Q-o-Q basis.
The credit-deposit ratio of IIB decreased from 76.9% in FY10 to
76.1% in FY11. In Q3FY11, the CD ratio was at 81.5%.
Robust growth in net interest income
Net interest income (NII) of IIB showed a robust growth of 55.3% in
FY11, slightly better than our expectation due to increase in the
high yielding CF business and robust growth in CASA. The CF
business now stands at 44% of the total as against 40% last year. IIB
also re-priced some of its corporate advances which helped them
get a better yield during the year. CASA on the other hand
improved from 23.7% in FY10 to 27.2% in FY11. The growth in CASA
was more on the SA side, which grew by a robust 59.7% y-o-y in
FY11 and CA grew by a healthy 42.3% y-o-y in FY11. This led to a
robust growth in NII which stood at Rs.13.77 bn in FY11 as against
Rs.8.86 bn last year.
Consistent improvement in NIM and return ratios
IIB’s Net Interest Margin (NIM) improved to 3.78% in FY11 from
3.16% in FY10. The improvement in NIM was mainly on account of
increase in the share of CF business. While the corporate book
increased by ~18% in FY11, CF book increased by ~41.4% in FY11.
For FY11, the RoAA was better than our expectations at 1.46%
(against 1.41% expected) & RoAE was also ahead of our
expectations at 19.3% (against 18.7% expected).
Asset quality under control
The asset quality came in as a surprise. Though we expected a
slight increase in the NPA’s due to the shift towards CF business,
the bank was able to keep the asset quality under check. The
GNPA decreased from 1.23% in FY10 to 1.01% in FY11 & NNPA
decreased from 0.5% in FY10 to 0.28% in FY11. The PCR was at
72.6% as against 60.1% last year. The credit cost for the bank
decreased by 18bps from 0.79% in FY10 to 0.61% in FY11.
Valuation
Currently at Rs.285, the stock is available at price to adj book
value (P/ABV) of ~2.5x of FY13E. We maintain our “Buy” rating
with a price target of Rs.328, an upside of ~19% from the CMP.
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