IndusInd Bank had the first analysts call yesterday after the appointment of the new MD and CEO, Sumant Kathpalia. The Bank wanted to provide an update on the impact of Covid and efforts its taking to make the bank stronger.
But what came from the meet was not very positive. The Bank said that it expects the bad loan provisioning as a percentage of its loan book, which is the credit cost to surge to around 200-210 bps at end of Q4FY20. And this surge indicates a rise in bad loan.
And to mitigate the impact of the rise in bad loans, the Bank is looking at increasing its provision coverage ratio to 60%, up from 53% in Q3.
What really spooked the market was when it said that its deposits were down 11% (QoQ) and almlst two-thirds of this reduction was on account of Govt accounts. Of the fall in deposits, 70% was on account of state govt ad 30% was corporate.
Reacting to these numbers, the stock is currently the top loser on the BSE and the stock fell 20% to an intraday low at Rs.329. It has recovered from the low and is now at Rs.351 levels, down 14.5%.