IndusInd Bank shares in focus as lender gets RBI approval for mutual fund biz

Shares of IndusInd Bank Ltd are in focus on Tuesday morning after the Reserve Bank of India (RBI) accorded its approval to the private bank for setting up a wholly-owned subsidiary to undertake asset management business of mutual funds.

In a filing to stock exchanges, IndusInd Bank said it would be infusing equity capital in the said asset management subsidiary, subject to the additional conditions as set out in the said RBI letter.

To recall, IndusInd International Holdings (IIHL) a Mauritius-based investment holding company with investments in BFS firms including IndusInd Bank, had in March this year picked up 60 per cent stake in Invesco Asset Management.

IndusInd International Holdings Ltd is among the promoter of IndusInd Bank and held 8,95,37,464 shares or 12.48 per cent stake in the private lender as on June 30.

Shares of IndusInd Bank are down 16 per cent in 2024 so far. The private lender had reported a mixed set of June quarter results, as lower income growth and net interest income (NII) dragged down earnings. Deposit growth was healthy, led by term deposits, analysts noted.

“The NIM trajectory remained stable, and the management guided stable trends going forward. The asset quality ratios deteriorated marginally as fresh slippages increased primarily in the consumer finance book. IIB guided a loan growth of 18-22 per cent for FY25 as it looks to operate at a CD ratio of 88-90 per cent. The bank indicated a credit cost of 110-130bp over FY25E, while it does not plan to use contingent provisions (INR10b),” MOFSL said.

“While MF and Card businesses may continue to report some stress in the near term, the overall slippages are likely to remain in control and will help maintain broadly stable asset quality,” it said while suggesting a target of Rs 1,700 on July 28.