IndusInd Bank Ltd Q2 FY24 Earnings Conference Call Insights

Key highlights from IndusInd Bank Ltd (INDUSINDBK) Q2 FY24 Earnings Concall

• Loan Growth Momentum
  • Loan growth continues to be strong at 21% YoY and 5% QoQ, driven by retail segment growing 25% YoY and 6% QoQ.
  • Retail growth driven by healthy disbursements in vehicle and microfinance businesses.
  • Corporate book also grew 18% YoY driven by small corporates.
• Healthy Retail Deposit Accretion
  • Maintained growth trajectory on retail deposit mobilization despite competitive intensity.
  • Share of retail deposits as per LCR improved to 43.7%, driven by 21% YoY and 4% QoQ growth in retail deposits.
  • Overall achieved 14% YoY and 4% QoQ total deposit growth, driven by granular retail growth.
• New Initiatives and Retail Asset Quality Improvement
  • Launched digital banking offer INDIE, well received with over 1.8 million downloads and 400,000 customers.
  • Earlier investments in affluent and NRI segments also growing well at 8% and 7% QoQ respectively.
  • Merchant acquiring business via Bharat Financial grew 16% QoQ to INR 4,904 crores.
  • Retail net slippages reduced from INR 1,059 crore to INR 865 crore QoQ.
  • Corporate slippages increased due to one large account slipping into NPA.
  • Net NPA at 0.57% with provision coverage ratio stable at 71%
• Profitability Metrics
  • Net interest margin remained steady at 4.29%.
  • Client fee income grew 13% YoY driven by retail momentum.
  • PAT grew 4% QoQ and 22% YoY to INR 2,202 crores.
  • Operating profit up 10% year-on-year.
  • Profit after tax up 22% year-on-year.
• Outlook
  • Targeting retail deposit share of 45-50% in next cycle.
  • Focus on sustaining over 20% loan growth.
  • Cost to income ratio expected to trend downwards.
  • New investments in digital and distribution to support growth
• Digital Initiatives
  • Launched personalized digital banking app INDIE with 1.8 million users.
  • Monthly active users on Indus Mobile up 30% year-on-year.
  • 74% of service requests processed digitally vs 69% last year.
  • UPI transactions on Indus Mobile up 71%.
  • Merchant app active users more than doubled year-on-year.
• Overall Slippages
  • Total slippages were Rs 1,450 crores this quarter compared to the guidance of Rs 1,200-1,300 crores.
  • This was due to some large corporate slippages of around Rs 180 crores which were one-offs.
  • The bank maintains FY23 slippage guidance of Rs 4,800-5,100 crores. Expects slippages to moderate in H2 with retail slippages declining.
• Deposit Growth and Credit Cost
  • Deposit growth has lagged credit growth over the last few quarters as excess liquidity was deployed.
  • Deposits grew by 7% year-on-year, with CASA ratio improving to 43%. Focus is on granular retail deposits through digital acquisition.
  • Management expects deposit growth to come back in next 2 quarters without needing pricing increase.
  • Credit costs were higher this quarter at 1.8% due to contingency buffer utilization of Rs 180 crores.
  • Management maintains credit cost guidance of 1.1-1.3% for FY23. Will start building contingency buffers again in H2.
• Operating Expenses And Cost-To-Income Ratio
  • Operating expenses grew by 25% due to investment in human capital, branches, capabilities and new businesses.
  • Cost-to-income ratio increased to 49.6%.
  • Focus is to improve it to 45-46% in the medium term through operating leverage in digital businesses, with a target of 41-43% in the long run.