Analyst Meet / AGM - Analyst Meet

23-May-2019, 04:22
IndusInd Bank conducted an analyst meet on 22 May 2019 to discuss the financial performance for the quarter March 2019 and prospects of the bank. Romesh Sobti - Managing Director and CEO along with his colleagues addressed the meeting:

Highlights:

• The bank has all approval in place for acquisition of Bharat Financial Inclusion, while the NCLT approval is pending and the court order is reserved which may be received once the court reopens on 27 May 2019
• The bank has maintained strong loan growth of 29% which is well-diversified across the sectors. Within the loan book. The corporate segment has increased 20%, vehicle loan Book 26% and non-vehicle book 27%.
• The loan growth is matched by similar level of deposit growth, while the bank has maintained healthy CASA deposit ratio. The bank has continued to see strong inflows of retail term deposits of Rs 5000-6000 crore for last three straight quarters. The bank expects to acquire Rs 35000 crore to Rs 40000 crore of retail term deposits in FY2020.
• The overall non-interest income of the bank has increased at strong pace of 29%, with 27% growth in core fee income for the quarter ended March 2019.
• The SMA 1 category loan book of the bank stood at 0.32% of the overall loan book, while SMA 2 category loan book stood at 0.34%. The SMA 1 and 2 category loan book comprises of 45 accounts.
• The SMA category loan book of the bank has declined from Rs 641 crore end March 2019 to Rs 548 crore as per latest available data.
• The bank has classified its entire exposure of Rs 3004 crore to IL&FS group as NPA in Q4FY2019 and made provisions of Rs 1120 crore and also reversed interest income of Rs 153 crore. The bank has made provisions at 75% for exposure to holding company (of Rs 2000 crore) and 25% for operating SPVs (exposure of Rs 1004 crore).
• Excluding the impact of provisions for IL&FS exposure, the bank has posted healthy 25% growth in profit for Q4FY2019 and 24% for FY2019. Excluding IL&FS account, bank has exhibited decline in its gross NPA ratio to 1.03% and net NPA ratio to 0.48% end March 2019.
• The fee income of the bank is well-diversified and sustainable, while half of the income is not linked to the balance sheet.
• The bank has identified exposure of 1.9% of the loan book as stressed exposure, which includes both funded as well as non funded exposure. The security cover for this stressed exposure stands at 140% of which 58% is covered by listed shares.
• As per the bank sub investment grade exposure is fully collateralized.
• The restructured advance book of the bank stood at 0.09% end March 2019.
• The bank has continued to add 1 million customers in the quarter ended March 2019. The bank proposes to raise its branch network to 2000 branches by March 2020
• The bank expects to reduce its cost to Income ratio to 42% by end March 2020
• The bank expects to maintain fee income growth in mid twenties, while the loan growth is also expected to be in mid twenties for FY2020.
• The bank expects to improve net interest marching 3.85-3.9% by end of 2020, while factoring in the acquisition of Bharat Financial Inclusion margin would be above 4% mark.
• The bank expects to maintain its credit cost 60 bps in FY2020.
• With regard to leadership transition, the bank would announce the name of next CEO 6 months before the expiry of the term of existing CEO.
• The bank proposes to improve provision coverage ratio to 60% by March 2020.

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