Indusind Bank :PAT beat on higher other income: Nomura research,

Key highlights
IndusInd Bank reported a PAT of INR2.36bn, marginally higher than our
estimate of INR2.29bn (Street est. of INR2.31bn) on the back of higherthan-
expected other income. Key highlights from the quarter include:
 Loan book growth remained strong (up 31% y/y), primarily driven by
48% increase in consumer finance loans, while the corporate book
increased at 20% y/y. While NII was below our estimates, strong fee
income of 42% y/y and trading gains of INR0.5bn (vs our estimate of
INR 0.27bn) supported the earnings beat.
 Margins declined 7bps sequentially to 3.22% due to 35bps q/q
increase in cost of funds vs 28bps q/q increase in yield on assets.
 Deposits grew at 28% y/y with savings deposits continuing to be strong,
growing 9.5% q/q leading to 56bps improvement in the CASA ratio at
27.9%.
 Asset quality was largely stable with sequentially flat GNPL and NNPL
ratios at 0.97% and 0.27%, respectively. The bank did not add any
restructured loan during the quarter (the restructured book stands at
0.24% of the loan book). However, higher slippage of INR1.09bn vs
our forecast of INR0.83bn led to LLPs of 50bps vs our estimate of
37bps.
 Total CAR was at 13.4% (including full-year profits) with Tier-I CAR at
11.2% (including full-year profits).

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Outlook and key takeaways from management call
 Slippage was higher than expected as one mid-sized gems & jewellery
account slipped to NPL leading to higher LLPs. Management expects
to recover 50-60% of the amount within 3-6 months.
 IIB expects to cross 500 branches by FY13 end and 650 by FY14 end
(currently at 421 branches). New branches opened last year average
around INR70-80mn SA per branch vs INR220-230mn for matured
branches. Management expects to end FY13 with INR170-180mn of
SA per branch. We are budgeting in INR125mn SA per branch by
FY13 end.
 Third-party fee income growth was tepid as the bank has stopped
recognising commission on non life insurance as a part of their income
for the last six months. Management guides for fee income growth to
be higher than balance sheet growth for FY13.
 Management guides towards LLPs of around 50bps for FY13. We are
building in LLPs of 56bps for FY13F.
 The bank expects to grow its loan book in the range of 25-30% vs our
current estimate of 25%.