IndusInd Bank Q3 business update

IndusInd Bank Q3 business update

Last updated: 07 Jan, 2021 | 06:48 am

IndusInd Bank Q3 business update

In its business update for the quarter ended December 2020, IndusInd Bank has reported performance on credit and deposit growth.

  • Flat advances growth: The loan growth seen by Net Advances remained flat during the quarter on a year-on-year basis. However, on a sequential basis, the bank recorded a 3% increase with advances being at ₹ 2.07 lakh crore at the end of December compared with ₹2,01,247 crore in the preceding quarter.
  • Strong deposit growth:  IndusInd reported a 5% sequential growth in deposits and an impressive 11% growth on a yearly basis. Out of the total deposits, Retail deposits and deposits from small business customers amounted to ₹ 85,914 crore for the latest quarter as compared to ₹ 75,610 crore as of September 30, 2020. 
  • CASA ratio (Current Account Savings Account Ratio): CASA ratio which determines how costly the deposits of the bank are (Current Account deposits are a cheap source of funds), declined by approximately 2% on a yearly basis but improved by  0.1% sequentially. 

INDmoney Analysis

  • While the deposits numbers are encouraging, loan growth still remains muted. This is after the fact that the previous quarter loan growth was supported by the festive season and pent up demand. Thus, the recovery in loan growth may become slower than anticipated. 
  • Previously, during the hearing of the interest on interest case, the Supreme Court had ordered banks to not recognise fresh NPAs, until further directions. Thus, the uncertainty around asset quality still persists. If the banks are directed to recognise fresh NPA’s, asset quality may worsen sharply. In its recent report, the RBI had also warned that the asset quality of banks may deteriorate sharply.
  • However, there will be more clarity around the asset quality once the Q3 results come in and the numbers on moratorium accounts and restructuring are made available.
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