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.