Release Date: January 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IndusInd Bank Ltd (BOM:532187, Financial) reported robust retail deposit growth with a 4% quarter-on-quarter and 14% year-on-year increase.
- The bank's vehicle finance business saw a significant improvement in disbursements, growing 25% quarter-on-quarter.
- Digital banking offerings have been expanded, showing positive trends among early adopters.
- The bank maintained a healthy capital adequacy ratio with CT1 at 15.18% and CRAR at 16.46%.
- Retail assets maintained strong growth momentum with a 19% year-on-year increase.
Negative Points
- The bank experienced higher slippages in the microfinance segment due to industry conditions.
- Overall deposit growth declined by 1% quarter-on-quarter as the bank let go of non-LCR beneficial wholesale deposits.
- Net interest margin decreased to 3.93% from 4.08% quarter-on-quarter due to lower microfinance balances and higher borrowing costs.
- The microfinance segment remains a concern with elevated slippages expected to continue into the next quarter.
- The bank's CASA ratio decreased quarter-on-quarter due to outflows from short-term flows such as dividend mandates.
Q & A Highlights
Q: Could you clarify the utilization of the contingency buffer? Was it towards the corporate account or the MFI?
A: INR160 crore was utilized towards the MFI and INR40 crore towards the corporate account.
Q: Given the elevated slippages, what is the outlook on provisioning and the potential utilization of the contingency buffer in the next quarter?
A: The 30 to 90-day bucket remains elevated at 4% due to poor performance in October and November. Provisioning will continue, but it's too early to comment on further utilization of the contingency buffer.
Q: What is the outlook on margins, considering the interest reversals and the rate cut environment?
A: It's difficult to provide guidance on margins now. We need to see how Q4 plays out, especially with microfinance stabilization and potential rate announcements.
Q: How do you view the MFI segment's growth and risk, especially with the new guidelines?
A: We aim to reduce the MFI book to 8-10% of our portfolio. The MFI business is cyclical, with an expected ROA of 2.5% to 3%. We are cautious and will wait for the 30 to 90-day bucket to stabilize before accelerating disbursements.
Q: What is the strategy for deposit growth, and will there be further debulking of deposits?
A: We will continue to reduce bulk deposits, aiming for a 48% to 52% LCR ratio. Our focus is on granularizing the liability base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
