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IndusInd Bank Q4 profit seen up 20%, provisions and exposure to gems, jewellery in focus

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IndusInd Bank is likely to continue its healthy profit numbers and stable loan growth for the January to March period and the full fiscal year ending March 2018 even as provisions could see some strain on the gross and net non-performing asset (NPA) ratios.

As per Reuters poll, provisions for the quarter and full year are likely to be at Rs 325 crore and Rs 1,170.9 crore, respectively.

The net profit estimates stood at Rs 961.5 crore for the January to March quarter, a substantial rise of 27.8 percent jump over Rs 751.6 crore in the same quarter a year ago.

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The private sector lender will be the first among the top major banks to report its fourth quarter financial results today.

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"IndusInd Bank has a portfolio of gems and jewellery segment. That is what we would look at for this quarter as that is the only risk factor. Overall, the bank will be stable in its performance," said Hatim Broachwala, banking analyst with IDBI Capital.

Net interest income during January-March quarter may grow slower to Rs 1,998.7 crore, up about 20 percent from Rs 1,667 crore in same quarter last fiscal, Reuters estimates showed.

Loan growth is expected over 20 percent backed by healthy commerical vehicle and retail loan growth.

What to watch for?

1 Reserve Bank of India had completed an audit of the banks in late December. The effect of divergence between the bank’s NPA accounting and that of the central bank, if any, will be seen in this quarter.

2 The bank has made no additional provision for the cases referred to the National Company Law Tribunal (NCLT) in Q3. Select loan accounts admitted to the insolvency courts could see some increase in provisions or capital set aside in Q4 towards potential loan losses.

A year ago, IndusInd Bank had seen some drag in its profitability due to a one-off provision mandated by the Reserve Bank of India on a corporate bridge loan by the bank to Ultratech.

3 Most importantly, after the Punjab National Bank fraud worth Rs 13,000 crore unearthed in February, IndusInd Bank may see impact on its book in the gems and jewellery segment, which has been at the centre of the fraud with alleged involvement of companies of Nirav Modi and Mehul Choksi's Gitanjali Group.

The bank has already announced without exact amount disclosure that it has a "small, two-digit exposure" to Gitanjali Gems and not linked to any LoUs (Letters of Undertaking) which were used to cause the frauds.

As per an Edelweiss report, IndusInd Bank's fund-based exposure to Gitanjali Group stands at Rs 6,940 crore while non-fund based was at Rs 200 crore.

4. The gross non-performing assets (NPAs) numbers will be key to watch out for like all other banks. In Q3, as a percentage of total advances, gross NPAs stood at 1.16 percent, a rise against 1.08 percent in the September quarter.

5. Earlier this month, the bank received RBI's approval to buy the securities services arm of IL&FS. The announcement of the deal details could be made by the bank's management.

In March 2017, the bank had entered an agreement with Infrastructure Leasing and Financial Services, the promoter shareholder of IL&FS Securities Services Ltd (ISSL), to acquire 100 percent stake in ISSL.

本文來源:https://www.moneycontrol.com/news/business/indusind-bank-q4-profit-seen-up-20-provisions-and-exposure-to-gems-jewellery-in-focus-2551985.html

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