IndusInd Bank: Widening deposit base a key

IndusInd Bank share price slumped 20% today after the lender said it has seen a withdrawal of 10-11% of its deposits since December quarter.
IndusInd Bank touched an intraday low of Rs 329.25, with more volume recorded close to low price.
IndusInd Bank stock price has fallen 66% in a month and 76% since the beginning of the year 2020.
The lender witnessed a 10-11% outflow of deposits, which is an increase compared to the 2% they indicated 10 days ago.

Deposit shrinking is attributed to YES Bank event, with two state governments’ deposits accounting for 2/3rd of total drawdown.
The management mentioned that a large part was on account of government deposits and bulk deposits, while the decline in retail deposits has been the lowest among the categories.
The lender has so far managed the deposit outflows through the debt market, using refinancing and foreign currency borrowings.

IndusInd Bank management, during the investor conference call, informed of increasing focus on granularising its deposit base and has also recently increased rated by 25bps on the 1-year deposits.
The management also said that they haven’t seen any deterioration in asset quality  yet but mentioned that NPAs in Q4 could be 30-40 bps higher in the unsecured loan segment.
The lender said it expects inflows from mutual funds to restart, as its credit ratings have been re-affirmed. It further added that its promoter has also applied to the RBI for an increase in stake to approximately 26%.

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