IndusInd Bank, on April 27, reported a 76.8 percent sequential drop in profit at Rs 301.84 crore in the March quarter, hit by higher provisions and lower other income, but lower tax (down 77 percent QoQ) limited the decline.
Net interest income increased 5.1 percent QoQ to Rs 3,231.2 crore, while net interest margin improved to 4.25 percent from 4.15 percent in the previous quarter and 3.59 percent in the corresponding period last year.
While addressing conference call, the bank said it was looking to take loan mix towards 60:40 for retail and corporate, respectively. The corporate book is expected to grow by 6-8 percent, with ticket size getting small.
Here are the highlights of IndusInd Bank's Q4FY20 earnings call compiled by Narnolia Financial Advisors:
Management Participant: Sumant Kathpalia - MD & CEO
Over 95 percent of the vehicle finance customers paid March instalments. On microfinance, 95 percent of the vehicle instalments were paid until lockdown and they were predominantly rural. On the corporate side, very few clients asked for moratorium.
The bank has made Rs 23 crore provision for COVID-19 as per RBI guidelines and an additional floating provision of Rs 260 crore. The provision has been made to cover any additional credit cost from vehicle finance and microfinance portfolio.
The bank carried out stress test analysis and based on latest available information on lockdown and has estimated an impact of delta 80 bps of GNPA and 50 bps credit cost on current situation.
As many as 1,911 bank branches are up and running and ATM network are at 95 percent of the capacity, call centres have seen activity at 60 percent. Fifty-three branches are in various stages of completion but were hampered by lockdown.
Slippages from three stressed groups, a power/paper group, a tea group, a medical equipment group and a broking company amounted to Rs 1,184 crore.
The bank has written off the broking account 100 percent. The exposure to the three stressed groups is down to only 30 bps of which 12 bps is cash-flow backed.
Fee income was partly impacted by the year-end lockdown as large part of distribution income comes towards the end of the quarter.
NIM improvement was driven by fall in cost of deposit sequentially.
Liquidity coverage ratio (LCR) during the quarter was maintained in the range of 110-120 percent.
The bank has fully provided for the large infra group during the year. The PCR of the banks stands at 63 percent. The bank has provided for several stressed accounts like tea account and an broking account. The bank is looking to take PCR to around 70 percent over the time.
The bank is looking to take loan mix towards 60:40 for retail and corporate, respectively. The corporate book is expected to grow by 6-8 percent with ticket size getting small.
The bank, currently, has no plans on capital raising but will keep evaluating and inform accordingly.
The growth in the gems and jewellery business is slow with adequate collateral. Only three clients opted for moratorium amounting to less than Rs 10 crore of total exposure.
Real estate segment has no SMA 2, overdues no SMA and no account has approached for loan extension.
Management stated that in April, the bank saw net retail deposits inflow of Rs 50-60 crore a day. Government deposit inflow of Rs 600-700 crore and Rs 2,000 crore is in pipeline. Corporate deposit inflow of Rs 6,000 crore in the last 15 days.
The bank has created telecom provision of Rs 75 crore by way of standard asset provision.
Unsecured credit card/personal loans: About 90 percent of the book lies in CIBIL prime category and above. The 70 percent is salaried and balance is self-employed.