 "Bandhan, IDFC First, RBL, CSB Bank among 19 financial stocks at 52-week low")
IndusInd Bank, Bandhan Bank, IDFC First Bank, CSB Bank, RBL Bank and Ujjivan Small Finance Bank were among 19 stocks from the BSE Financial Services index to hit their respective 52-week low on the BSE in Friday’s intra-day trade amid a sharp fall in equities. Capital Small Finance Bank, ESAF Small Finance Bank, Fedbank Financial Services and Fusion Finance hit an all-time low.
At 02:14 pm; the BSE Smallcap and Midap indices were down 2.9 per cent and 2 per cent, respectively. The BSE Financial Services index was down 1.75 per cent, as compared to 1 per cent decline in the BSE Sensex.
IndusInd Bank, the top loser among the financial services index, tanked 20 per cent to Rs 1,025.30 after the bank reported a weak set of July-September quarter (Q2) results for financial year 2024-25 (FY25) with a 39.2 per cent year-on-year (YoY) decline in net profit at Rs 1,325 crore as the bank's provisions surged 87 per cent YoY to Rs 1,820 crore for the quarter. The stock was trading at its lowest level since March 2023.
Asset quality of the lender deteriorated during the quarter with GNPA & NNPA rising by 9bps/ 4bps quarter-on-quarter (QoQ) to 2.11 per cent & 0.64 per cent. Fresh slippage in Q2 rose to Rs 1,790 crore vs. Rs 1,530 crore last quarter, but the surge in provisioning was heavy (even adjusting for a contingent provision of Rs 525 crore) as the movement within buckets was elevated.
ALSO READ: Tech charts suggests IndusInd Bank could dip another 22% hereon Management remains confident of recoveries in the MFI book in H2FY25F, but considering the ground realities analysts at InCred Equities prefer to remain cautious on the same. The brokerage firm said they have been highlighting its concerns over sustainability of growth quality for the past few quarters amid slowing vehicle demand, rising concerns over unsecured lending, including the MFI book, which is playing out on expected lines.
The brokerage firm said they remain watchful of the MFI segment whereas within vehicle loans, cyclicality affects loan growth, while unsecured non-vehicle retail lending including credit cards and personal loans also remain a cause of concern. Further, they are equally watchful of small corporate loans in recent quarters which can witness adversity.
IndusInd Bank’s profitability significantly impacted by higher contingent provisions combined with slight deterioration in asset quality & slowdown in microfinance institution (MFI) segment kept pressure on margins. Contingent provision in the challenging quarter remained unexplained. Management maintains guidance on credit cost and revival in business growth especially the high yielding segment, ICICI Securities said in a note.
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Suryoday Small Finance Bank shares plunged 15 per cent, hitting a 52-week low of Rs 133.30 after the bank reported 9.8 per cent YoY decline in net profit at Rs 50.3 crore.
Overall the MFI industry is passing through a difficult phase of asset quality deterioration. The stress in the microfinance sector overall, driven by increasing borrower indebtedness, political movements such as Karza Mukhti Abhiyan, etc.
Meanwhile, according to a Business Standard report, the four non-banking finance companies (NBFCs), including two MFIs, that faced regulatory wrath last week were mainly charging exorbitant rates to microloan borrowers from the most vulnerable sections, in order to maintain spreads of 14 per cent.
On October 17, the Reserve Bank of India barred four NBFCs — Asirvad Micro Finance, Arohan Financial Services, DMI Finance, and Navi Finserv — from sanctioning and disbursing loans, citing usurious interest rates charged by them for their microfinance borrowers. CLICK HERE FOR FULL REPORT