IndusInd Bank Ltd. Q4FY23 Result First Cut – NII and PAT improves; Sharp reduction in provisions

IndusInd Bank Ltd. reported a decent performance in Q4FY23. Net Interest Income grew 3.9% QoQ/up 17.2% YoY to Rs. 4,669.4 crores, while NIM remained stable at 4.28%, an increase of 1bps QoQ/ 8bps YoY.

• Pre-provisions Operating Profit (PPOP) grew 11.2% YoY (up 1.9% QoQ) to Rs. 3,757.5 crores.
• Cost to Income ratio remained stable at 44.93% in Q4FY23.
• Provisions declined sharply to Rs. 1,030.1 crores, a drop of 29.5% YoY/3.3% QoQ.
• Provision Coverage Ratio stood at 71%.
• Net Profit grew in double-digit by 45.9% YoY/up 4.1% QoQ to Rs. 2,043.4 crores.
• Asset Quality improved, with GNPA at 1.98% and Net NPA at 0.59% in Q4FY23.
• Capital Adequacy Ratio stood at 17.86% in Q4FY23.
• CASA ratio remained stable at 40.0% in Q4FY23, similar to its previous quarter.
• Total Deposits grew 3.3% QoQ/14.6% YoY to Rs. 3.36 lac crores. Total Advances grew 6.3% QoQ/21.3% YoY to Rs. 2.89 lac crores.
• The Board also recommended a dividend payment of Rs. 14 per equity share.

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IndusInd Bank has delivered a decent performance in the fourth quarter, with good momentum seen across its businesses such as retail and corporate segments. The bank’s key metrics also showed an improving trend including NII, RoA and RoE along with better metrics on the asset quality side. We believe that the company would likely garner higher market share and manage risks through greater diversification going forward. We believe that a well-capitalized balance sheet, improvement in collection efficiencies across business segments (vehicle and MFI being the key), lower credit costs, conservative provisioning and strong focus on risk management framework would help the company to command a higher valuation multiple going forward.