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Analyst Meet / AGM - Analyst Meet

Loan growth to remain strong at 25-30%

IndusInd Bank

22-Apr-2016, 11:18
IndusInd Bank conducted an analyst meet on 21 April 2016 to discuss the financial performance for the quarter March 2016 and prospects of the bank. Romesh Sobti - Managing Director and CEO along with his colleagues addressed the call:
Highlights:

Healthy growth in Net Interest Income (NII) as well as fee income supported the bottomline growth of the bank.
The loan growth of the bank continued to be robust and ahead of industry level at 29% at end March 2016 over March 2015. Bank has maintained the loan book growth target of 25-30% for FY2017.
The share of corporate loan book of the bank has eased to 56% at end March 2016 from 60% at end March 2015. Bank proposes to have a corporate-retail loan mix of 50-50.
Bank has sell down Rs 2200 crore of loan in Q4FY2016, in addition to Rs 700 crore in Q3FY2016. The loan selldown strategy is expected to contribute to reduction in corporate loan book share.
Bank has posted strong 25% growth in deposits, while expects the credit-deposit ratio to decline ahead.
Bank has continued to improve CASA ratio to 35.2% at end March 2016 from 35% a quarter ago and 34.1% a year ago. Bank is awaiting the right time for further revising its saving deposit rates.
Bank has improved NIMs to 3.94% in Q4FY2016 from 3.91% in the preceding quarter and 3.68% in the corresponding quarter of last year. Bank expect the negligible impact of marginal cost of funds based lending rate (MCLR) effective from 01 April 2016 on its NIMs and expects NIMs to remain stable.
The fixed rate loans share stands at 72% at end March 2016.
Bank's core fee income continued to be strong, which was driven by healthy loan processing fees. Bank expects a boost to its distribution fee income from recent tie up with Tata AIA Life Insurance.
Bank accelerated the pace of branch addition in Q4FY2016 and opened 94 branches to cross 1000 branches network mark at end March 2016. Bank is on track to touch the branch network of 1200 branches by end March 2017.
Operating expenses increased 33% in Q4FY2016 with the strong branches expansion, employee additions and technology related expenses, still bank has exhibited an improvement in cost-to-income ratio. Bank expects cost-to-income income ratio to remain stable.
The credit cost for the bank stood at 17 bps in Q4 and Q3FY2016. The full credit cost at 57 bps was lower than the estimate of 57 bps, which also includes the amortization related credit cost of 17 bps. Bank expects downward movement in its credit cost in FY2017.
Asset quality of the bank weakened marginally in Q4FY2016. GNPA ratio rose 05 bps qoq to 0.87%, while NNPA ratio moved up 03 bps qoq to 0.36% at end March 2016.
Bank has sold loans worth Rs 40 crore to ARCs in Q4FY2016.
However, the restructured advance book of the bank has declined to 0.53% of advances at end March 2016 from 0.58% at end December 2015.
Banks asset quality did not have any negative impact from RBI's asset quality review (AQR).
Banks diamond portfolio quality remains stable, while the sector outlook is improving.