Indusind Bank (IIB) reported a fourth quarter PAT of R396 crore, 9% above our estimate of R360 crore (consensus at R370 crore). The PAT beat largely came in on account of better-than-expected NIMs, higher trading gains and lower P&L provisions. GNPL ratio came in at 1.1%, with delinquency of R190 crore in the quarter and LLPs of 54 bps.
The incremental contribution to loan book growth in FY14 came from large and mid-corporates (60%), SMEs (18%) and LAP (10%) while CV/CE book declined. Overall loan growth of 24%y-o-y included just 11%y-o-y growth in consumer finance book while SME book was up 54%y-o-y. IIB management guided for loan book CAGR of 25-30%y-o-y over the next three years as part of its planning cycle-3 spanning from 2014-17. Core fee income growth was 23%y-o-y with strong addition from Ibanking driven and loan processing related fee streams. The bank guided for clocking fee income growth higher than balance sheet growth over the next three years.
IndusInd Bank managed to improve its NIMs by 10bps q-o-q to 3.75% helped by 28 bps drop in cost-of-funds.
IIB reported another stable quarter in terms of asset quality with marginal increase in NPL ratios and flat LLPs. Fresh delinquency was R188 crore for Q4 (vs R184 crore in Q3), while reduction was R193 crore (including R35 crore sale to ARC). Provision coverage was down 329 bps q-o-q to 70.4% while calculated LLPs were 54 bps for Q4. Restructured loans were 33 bps of overall book with two small accounts added during the quarter. The bank also indicated delinquency of 1.3% on its CV book which it believed to be the bottom of the cycle. IIB currently trades at 2.6x our average.