Motilal Oswal: Sharp Decline In IndusInd Bank’s Moratorium Book In Q1; Liability Franchise Showing Stability
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Motial Oswal Report
IndusInd Bank Ltd. reported a stable quarter as lower fee income and higher provisions (credit cost of 4.5% annualised) impacted earnings.
On the other hand, lower opex and modest improvement in margins were a surprise. Provision coverage ratio improved to 66.6%, while the bank increased the Covid-19 provisioning buffer to Rs 12 billion.
Loan growth remains under pressure, while deposit growth is showing signs of stabilising.
The moratorium book has also declined to approximately 16% at June 2020-end from approximately 50% as of April 2020-end; the bank suggested gross non-performing asset/credit cost impact of 92 billion/65 basis points due to Covid-19.
We largely maintain our estimates as softness in other income is compensated by lower opex and provisions.
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