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IndusInd Bank (INBK.BO)
Buy Equity Research
Above expectations as Fee/Fx income offsets lower NII
Higher profit driven by higher fees and lower NPL provisions
IndusInd Bank (INBK) reported 2QFY12 net profit of Rs1.93bn (+7% qoq, +45%
yoy), 13% ahead of GSe and 6% ahead of Bloomberg consensus. Highlights:
1) NII came in 3% below GSe at Rs4.2 (+27% yoy) on lower NIM at 3.36%,
(-5bp qoq/yoy) as CASA declined 50bps qoq to 27.7%, and on rising cost of
deposits and slower repricing on the retail book which now accounts for 47%
of book (FY11: 44%) 2) Other income came in strong, 17% ahead of GSe driven
by 30% growth yoy in core fees on higher Exchange/treasury income and 3rd
party product distribution. (3) Expenses came in 4% above GSe (+34% yoy) as
other costs rose 42% yoy on branch expansion and accelerated depreciation
cost, (4) Asset quality: Gross NPL rose 8% qoq while net NPL grew 11% qoq as
PCR declined to 72% (-90bps qoq). Provisions continued to remain low at 0.6%
of loans, 18% below GSe.
Fee income to be a key driver of earnings, retain CL Buy
While we were a bit disappointed with the NII development, Fee/FX
income continues to be a positive surprise on earnings. We forecast a 30%
growth in fee income (FY12E-FY14E) and we believe this will be a key
driver in IndusInd’s long term earnings growth story. We expect the
company to deliver EPS growth of over 20% in the next three years driven by
branch expansion (35% CAGR between FY11-13E) and margin expansion on
higher CASA (32% in FY13E from 27% in FY11). We raise FY12E-FY14E EPS by
1%-6% to factor higher fee income and raise our 12m CAMELOT-based TP to
Rs340 from Rs320 as we also roll forward target BVPS to Sep 2012. Key risks:
High dependence on wholesale deposits, frequent capital raisings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IndusInd Bank (INBK.BO)
Buy Equity Research
Above expectations as Fee/Fx income offsets lower NII
Higher profit driven by higher fees and lower NPL provisions
IndusInd Bank (INBK) reported 2QFY12 net profit of Rs1.93bn (+7% qoq, +45%
yoy), 13% ahead of GSe and 6% ahead of Bloomberg consensus. Highlights:
1) NII came in 3% below GSe at Rs4.2 (+27% yoy) on lower NIM at 3.36%,
(-5bp qoq/yoy) as CASA declined 50bps qoq to 27.7%, and on rising cost of
deposits and slower repricing on the retail book which now accounts for 47%
of book (FY11: 44%) 2) Other income came in strong, 17% ahead of GSe driven
by 30% growth yoy in core fees on higher Exchange/treasury income and 3rd
party product distribution. (3) Expenses came in 4% above GSe (+34% yoy) as
other costs rose 42% yoy on branch expansion and accelerated depreciation
cost, (4) Asset quality: Gross NPL rose 8% qoq while net NPL grew 11% qoq as
PCR declined to 72% (-90bps qoq). Provisions continued to remain low at 0.6%
of loans, 18% below GSe.
Fee income to be a key driver of earnings, retain CL Buy
While we were a bit disappointed with the NII development, Fee/FX
income continues to be a positive surprise on earnings. We forecast a 30%
growth in fee income (FY12E-FY14E) and we believe this will be a key
driver in IndusInd’s long term earnings growth story. We expect the
company to deliver EPS growth of over 20% in the next three years driven by
branch expansion (35% CAGR between FY11-13E) and margin expansion on
higher CASA (32% in FY13E from 27% in FY11). We raise FY12E-FY14E EPS by
1%-6% to factor higher fee income and raise our 12m CAMELOT-based TP to
Rs340 from Rs320 as we also roll forward target BVPS to Sep 2012. Key risks:
High dependence on wholesale deposits, frequent capital raisings.
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