Indusind Bank Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Indusind Bank Ltd (INDUSINDBK) Q3 FY23 Earnings Concall

Management Update:

• [00:13:56] INDUSINDBK opened 64 branches during 3Q, totaling the branch count to 2,384 and the bank is aiming to close FY23 at 2,450-2,500 branches.

Q&A Highlights:

• [00:23:22] Mahrukh Adajania from Nuvama Wealth asked about the new ECL circular. Sumant Kathpalia MD answered it’s too early to comment. The bank expects some standardization to happen due to this circular.

• [00:25:52] Mahrukh Adajania of Nuvama Wealth enquired if the bank is seeing any deceleration in loan growth since it was strong for a long period of time. Sumant Kathpalia MD replied that INDUSIND is seeing growth in its vehicle finance business and microfinance industry, as well as the MSME and SME segments. The bank expects a 20-25% growth in loan products and a CD ratio of 85-93%.

• [00:28:47] Kunal Shah with ICICI Securities asked about QonQ deterioration in asset quality on the consumer finance side, if it’s due to lower write-offs or higher slippages. Sumant Kathpalia MD said the slippages in vehicle finance have been caused by an issue in the state of Orissa related to duty that has been rolled back. And 8% delinquency is seen in the total loan portfolio.

• [00:32:14] Kunal Shah at ICICI Securities asked about the NIM outlook given fixed rate nature on the lending side. Sumant Kathpalia MD clarified that the bank has maintained margins at 4.15-4.25%. PPOP margins will be greater than 5%.

• [00:35:20] Rahul Jain from Goldman Sachs enquired about the 30 DPD, 60 DPD in MFI. Sumant Kathpalia MD said 30-90 DPD is 2.4% of the total book.

• [00:35:42] Rahul Jain from Goldman Sachs also asked about the driver of strong current account deposits. Sumant Kathpalia MD said that current accounts can be volatile, but the bank specializes in three areas: escrow; mainly real estate, NBFCs cash management, and trade FX. As a result, the bank gets floors growth and wallet business.

• [00:37:42] Rahul Jain from Goldman Sachs queried about the improved yields on the corporate portfolio, and the rating profile of the corporates. Sumant Kathpalia MD said bulk of the corporate book is floating rate. Every quarter the book is re-priced and it keeps happening.

• [00:41:49] Abhishek from HSBC asked about the quantity of disbursement on the MFI book and its outlook. Sumant Kathpalia MD answered that it’s about INR8,928 crores only for MFI. The outlook is it should got to INR11,000 crores, which is the max it will go to.

• [00:44:41] Saurabh from JPMorgan asked about the overall sales earning on the [LCBG] book. Arun Khurana Deputy CEO said it’s all client related business on LCBG. Trade remittances was about INR201 crores and FX on account of client income was about INR250 crores.

• [00:46:49] M.B. Mahesh of Kotak Securities queried about cost of deposits increasing 30 bps in 3Q and how it will change over the next few quarters. Sumant Kathpalia MD answered that there will around 30 bp odd increase plus minus 5 bp.

• [00:49:45] Manish Shukla from Axis Capital asked about restructured asset provisions out of the contingency provision of INR2,192 crores. Sumant Kathpalia MD said it’s around INR458 crores, which is what the bank has to carry as per RBI circular; about 5-10% depending on the security and such things.

• [00:50:31] Manish Shukla from Axis Capital asked about the yield on consumer loans increasing by 32 bps over last 9 months, even though the book itself has grown 17%. Sumant Kathpalia MD replied that credit card yields have declined over the last 4 quarters, leading to lower revolving rates. Also, the high-yielding scooter and 3-wheeler loan businesses have seen a decline in disbursements due to COVID, and microfinance disbursements were also not very high.

• [00:51:51] Manish Shukla from Axis Capital queried about the yield on the housing loans. Sumant Kathpalia MD clarified that the bank’s yield is about 8.95 right now.