Analyst Meet / AGM - Analyst Meet

19-Apr-2017, 09:49
IndusInd Bank conducted an analyst meet on 19 April 2017 to discuss the financial performance for the quarter March 2017 and prospects of the bank. Romesh Sobti - Managing Director and CEO along with his colleagues addressed the call:

Highlights:

• As per the bank, the bottomlines of the bank were mainly impacted by a one-off provision of Rs 122 crore for cement sector account classified as standard advance on RBI advice. The Bank's exposure which is due for repayment in June 2017 relates to a bridge loan for a Merger & Acquisition transaction in cement industry.
• The loan book of the bank surged 28% end March 2017 over March 2016 with corporate-retail loan book break up at 60%-40%. Within retail loan book, the vehicle loans account for 70% and 30% were non-retail loans end March 2017.
• The bank has improved recorded healthy CASA ratio of 36.9% end March 2017. As per the bank, it has retained about 35% of the demonetization related CASA deposit inflows. The bank is also witnessing strong traction in growth of new to bank customers.
• During Q4FY2017, the bank has sold two accounts for sale consideration of Rs 190 crore to the asset reconstruction companies. The bank has received 15% cash and rest as securities receipts against sale of 2 accounts to ARCs. The bank had written down these two accounts after making provision of Rs 140 crore in Q4FY2017.
• The credit cost for bank has remained below the budgeted level of 60 bps for FY2017.
• The bank raised Rs 1000 crore Tier I bonds in Q4FY2017 and another Rs 1000 crore in Q1FY2018.
• As per the bank, the impact of Ind-AS on its net profit could be around 4-5%. However, the bank expects the provision requirement to decline under Ind-AS, while it would be positive for retail loan book of the bank.

Planning Cycle 3 (2014-2017)

• The bank has concluded its three year growth strategy named - 'Planning cycle 3' doubling business and profitability in FY2017.
• the loan growth of the bank was in the guided range of 25-30%, while improving the CASA ratio above the target level of 35% under Planning Cycle 3.
• The bank has doubled branch network to 1200 branches and customer base to 9.5 million at end March 2017 over March 2014.

Planning Cycle 4 (2017-2020)

• The bank has consistently doubled its business and profitability during last three planning cycles.
• The bank has launched its new three-year growth strategy named 'Planning Cycle 4' for period FY2018 to FY2020 aiming to achieve loan growth of 25-30%, CASA ratio of 40%, branch network of 2000 branches by end FY2020.
• The loan book mix between retail and corporate would be 50:50 by end March 2020, while within retail the vehicle and non-vehicle mix would 50:50. The loan mix shifting in favor of retail loans provides scopes for 35 bps NIM improvement.
• The bank has 350 branches in rural areas, while bank is planning to enhance focus on rural banking and microfinance aiming to generate 10% of its profits by FY2020.
• Digital banking with multiple initiatives is expected garner 14% of profits by FY2020.
• The bank proposes to enhance focus on cross sell between MFI, vehicle and retail customers.
• The bank would focus more on productivity improvement, while aims to reduce cost-to-income ratio by 2 percentages by FY2020.
• The bank would be focusing on improving customer experience, while aims to add Rs 10000 crore of CASA deposits and raise CASA ratio to 40 by March 2020.
• Under Planning Cycle 4, the revenue growth would exceed balance sheet growth.
• The bank proposes to more than double customer base to more than 20 million by March 2020.
• The bank has targeted return on risk weighted assets (RoRWA) of 2.4% by FY2020.
• The bank remains open on inorganic growth opportunities, if its value accretive.

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