• Retail Deposit Growth: 4% quarter-on-quarter and 16% year-on-year growth.

• Loan Growth: 3% quarter-on-quarter and 13% year-on-year growth.

• Net Interest Income: INR 5,347 crore, 5% growth.

• Net Interest Margin: 4.08%, down from 4.25% quarter-on-quarter.

• Gross NPA: 2.11%.

• Net NPA: 0.64%.

• Provision Coverage Ratio (PCR): 70%.

• Vehicle Finance Loan Growth: 10% year-on-year and 1% quarter-on-quarter.

• Microfinance Disbursements: INR 7,050 crore in Q2.

• Contingent Provision Buffer: Increased from INR 1,000 crore to INR 1,525 crore.

• Capital Adequacy Ratio: CET1 at 15.21% and Total Capital at 16.51%.

• Profit After Tax: INR 1,331 crore, 1% decline quarter-on-quarter.

• Home Loan Growth: 28% quarter-on-quarter.

• Merchant Loan Book: INR 5,790 crore, 18% year-on-year growth.

• Warning! GuruFocus has detected 2 Warning Signs with BOM:532187.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• IndusInd Bank Ltd (BOM:532187) reported a healthy retail deposit growth with a 16% year-on-year increase, indicating strong customer trust and deposit mobilization.

• The bank's vehicle finance segment outperformed industry volumes, showing a 10% year-on-year growth, which highlights its competitive edge in this sector.

• Digital banking initiatives are gaining traction, with over 1.4 million accounts opened and significant transaction volumes, reflecting successful digital transformation efforts.

• The corporate banking segment showed robust growth, particularly in mid and small corporates, with a 16% year-on-year increase, demonstrating effective corporate client engagement.

• The bank maintained a strong liquidity position with an average Liquidity Coverage Ratio (LCR) of 118%, ensuring financial stability and resilience.

Negative Points

• The microfinance segment faced challenges with subdued growth and increased stress, leading to higher slippages and credit costs.

• Net interest margin declined to 4.08% from 4.25% quarter-on-quarter, impacted by lower loan yields and a cautious stance on unsecured lending.

• The bank's cautious approach in certain segments, such as microfinance and credit cards, resulted in slower loan growth, affecting overall profitability.

• Contingent provisions were increased as a precautionary measure, impacting short-term earnings and reflecting concerns over potential credit risks.

• Fee income growth was weaker than expected, affected by lower treasury fees and regulatory changes impacting credit card fees.

Q & A Highlights

Q: Can you explain the significant rundown in the MFI book and the SMA 01 to pull particularly for the MFI? A: Our disbursements were at 8,500 crore in Q1 and 7,050 crore in Q2, against an average rate of 12,000 to 13,000 crore. This led to a rundown in the book as payments are coming in. The 30 to 90 DPD is currently at 4%.