IndusInd Bank rose 2.40% to Rs 479.30, extending gains for third day.
Shares of the private sector bank have added 25.17% in the past three sessions from its recent closing low of Rs 382.90 recorded on 24 April 2020.
IndusInd Bank's consolidated net profit fell 12.32% to Rs 315.25 crore on 21.30% rise in total income to Rs 9,158.80 crore in Q4 March 2020 over Q4 March 2019. The result was announced after market hours on Monday, 27 April 2020.
The bank's provisions and contingencies jumped 56.36% to Rs 2440.32 crore in Q4 March 2020 over Q4 March 2019. Pre Provision Operating Profit (PPOP) at Rs 2,856.72 crore for Q4 March 2020 grew by 38.20% over the corresponding quarter of previous year.
The loan book quality was stable. The ratio of gross NPAs to gross advances stood at 2.45% as on 31 March 2020 as against 2.18% as on 31 December 2019 and 2.10% as on 31 March 2019. The ratio of net NPAs to net advances stood at 0.91% as on 31 March 2020 as against 1.05% as on 31 December 2019 and 1.21% as on 31 March 2019.
At its Q4 earnings call, IndusInd Bank's MD and CEO Sumant Kathpalia said as the current economic situation is the worse than the Great Depression, the bank feels the government would have to provide a much larger stimulus to tide over the current crisis.
All branches of the bank are operating normally, while 95% of the ATMs are operating. The fee income of the bank was impacted by the lockdown as large part of distribution income comes at the end of the quarter. The bank has exhibited healthy improvement in margins driven by decline in cost of deposits.
The Provision Coverage Ratio increased to 63.34% in Q4FY20 from 43.04% in Q4FY19. The bank has substantially improved its provision coverage ratio, while making provisions for many stressed accounts such as tea account and broking account. The bank aims to further improve provision coverage ratio to around 70% over a period of time.
The share of top 20 advances has declined to 10% end March 2020 from 15% end March 2019. The bank expects its exposure to sensitive sectors to continue to decline going forward. The exposure to the three stressed groups stands at 30 bps of which 12 bps is cash flow backed. The bank does not have any plans for capital raising as of now.
As per the bank, its retail loan growth would be faster than corporate growth. The bank proposes to raise a share of retail loans to 65% in next 2 years from 60% at the end March 2020. The bank expects consumer loans to grow at 10-15% with Commercial vehicles growing at 12-14%, microfinance 20% and non-vehicle at 20-22% in FY2021. The bank proposes to maintain the share of unsecured loans at 4-5% of total loans. The corporate loans are expected to grow at 6-9%.
The bank is focusing on granularization of deposits. The bank is witnessing inflows of retail net deposit inflows of Rs 50-60 crore per day. The bank has also recorded government deposit inflow of Rs 600-700 crore, while another Rs 2000 crore is in pipeline. The bank also witnessed inflows of Rs 6000 crore of corporate deposits in the last 15 days.
The bank has carried out stress test analysis and based on latest information available on lockdown, it has estimated an impact of 80 bps on GNPA and 50 bps on credit cost.
The credit cost was 2.25% for FY20, while it was 1.45% excluding IL&FS and COVID-19. The credit cost is expected at 120-130 bps for FY2021.
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