IndusInd Bank- Robust 4Q11 performance and reaffirmation of growth plans:: Credit Suisse,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


IndusInd Bank------------------------------------------------------------------ Maintain OUTPERFORM
Robust 4Q11 performance and reaffirmation of growth plans


● IndusInd Bank reported 4Q FY11 results and laid out its strategy
for its next three-year planning cycle (FY12-14). 4Q FY11 PBT
was Rs2.6 bn. Excluding treasury and trading gains of Rs0.17 bn,
the underlying PBT of Rs2.4 was marginally ahead of
expectations.
● NIMs declined 11 bps QoQ as a sharp increase in deposit costs
was only partly offset by loan rate hikes and shifts in loan mix to
the higher yielding consumer  finance divison. Fee income
declined due to volatility in investment banking revenue. Credit
costs fell (to 56 bps) as the credit environment remained benign.  
● The next three-year plan’s key elements are: (1) raising the CASA
ratio from 27% to 35%; (2) expanding the loan book by a 25-30%
CAGR and specifically the consumer finance division’s by a 29%
CAGR to Rs250 bn and (3) fee growth outpacing the loan book.
● Our FY13 EPS increases by 4% as we build in better NIMs and
we value IndusInd at 15.2x FY13 EPS (target price raised to
Rs300 from Rs 265). We retain our OUTPERFORM.
Operational performance remains robust
Deposit costs rose sharply during the quarter (from 6.17% to 7.03%),
the NIM decline was managed by raising rates and by shifting the loan
mix towards the higher yielding consumer finance division. Deposit
mobilisation was stepped up (12% QoQ) relative to loan growth (5%
QoQ) to bring the loan-deposit ratio back to normal levels (from 82%
in the previous quarter to 76%). Core fee income grew 47% YoY, but
fell 4% QoQ. Credit costs fell to 56 bps (72 bps in 3Q) as slippages
dropped from 1.5% in 3Q to 0.9%.