Capitaline

Analyst Meet / AGM 11-Jul-18

Conference Call

IndusInd Bank

Expects to maintain NIMs in the range of 3.9-4.0%

IndusInd Bank conducted a conference call on 10 July 2018 to discuss the financial performance for the quarter June 2018 and prospects of the bank. Romesh Sobti - Managing Director and CEO along with his colleagues addressed the call:
Highlights:

The bank has continued to record strong growth on sequential basis as well as over a year ago level end June 2018. The bank has posted 6% qoq growth in NII and 4% in loan book in Q1FY2019.
The bank has posted strong 29% growth in loan book, driven by 30% surge in the corporate loans, while the retail loan book also jumped 28% end June 2018 over June 2017. Within retail loan book, vehicle as well as non-vehicle loan book has increased at strong pace of 28% each end June 2018.
The bank has maintained strong loan growth end June 2018, despite sale of corporate loans worth hoping Rs 8000 crore.
The bank has posted strong 37% growth in CASA deposits, driven by 51% surge in saving account deposits end June 2018 over June 2017. Government deposits form 15-20% of overall balance sheet.
The bank has stepped up saving account customer acquisition to 125 thousand per months, while aims to further ramp up to 150 thousand per month, going forward.
The bank has added 1 million customers in Q1FY2018 taking the overall customer base to 12 million end June 2018.
The bank has exhibited improvement in RoA and RoE, while reduced expense ratio to 44% in Q1FY2019.
The bank opened 10 branches in Q1FY2019 and targets to add 200 branches in FY19.
The bank has witnessed marginal decline in NIMs due to increase in cost of fund, which runs ahead of improvement in yield on asset. The bank has raised MCLR rate by 70 bps since November 2017. Around 45% of loan book is linked to MCLR. The bank expects to maintain NIMs in the range of 3.9- 4.0%.
The bank has witnessed mark to market loss of Rs 86 crore in the investment book in Q1FY2019, which are fully provided and bank has not utilized RBI dispensation to spread investment losses.
The bank disclosed early stress indicators for vehicle portfolio, which suggest slight moderation in the credit cost for vehicle finance portfolio.
On asset quality front, the bank has exhibited sharp decline in fresh slippage ratio to 1.31% in Q1FY2019 from 2.68% in Q4FY2018. The bank has also showed decline in credit cost to 14 bps in Q1FY2018, while maintained provision coverage ratio stable at 56% end June 2018. The standard restructured loans of the bank were mere 5 bps, while securities receipt book stood at 33 bps end June 2018.
The bank has consumed 33 bps of Tier-1 in Q1FY2019 with 8 bps consumption was on account of dividend and 25 bps due to loan growth.
The bank has witnessed increase in ratio of RWA to total assets to 79.5% end June 2018 from 78.1% end March 2018, due to lending to sectors like real estate and unsecured loans, while bank expects RWA to Assets ratio to moderate ahead.
The bank has done refinancing to four NCLT accounts, with strategy to retain 20% of the loan amount and sell down the balance.
As per the bank, the two-wheeler market is growing, but the two-wheeler finance market is actually shrinking as approximately 80% of two-wheelers sale takes place in cash and credit cards. The bank is financing 70-75 thousand two wheelers per month.
The bank is awaiting final approval for merger with BFIL from NCLT and the merger is likely to be completed in next 3 months. The IL&FS Securities acquisition is likely to be completed in next 60 days.

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