IndusInd Bank targeting credit growth of 18-20% in FY23, MD says

IndusInd Bank posted a 57 percent year-on-year rise in net profit this September quarter.

Private sector lender IndusInd Bank is targeting a credit growth of 18-20 percent for this financial year, its managing director and chief executive officer said on October 19.

“We work in three-year timeframes and we have always said that we will grow (credit) at 16-18 percent CAGR (compound annual growth rate). This year, we should grow at 18-20 percent CAGR,” Sumant Kathpalia told reporters at a conference call after July-September earnings.

When asked about how the bank plans to fund this credit growth, Kathpalia said that the lender would continue with its strategy to granularise deposits. The bank’s liabilities will be priced 50-to-75 basis points (bps) higher than the market, he added. One bps equals one-hundredth of a percentage point.

Also read: IndusInd Bank’s net profit shoots up 57% YoY on lesser provisioning

Strong numbers:

IndusInd Bank’s loans went up 18 percent year-on-year and 5 percent quarter-on-quarter to Rs 2,60,129 crore in the July-September quarter. Its deposits went up 15 percent YoY and 4 percent QoQ to Rs 3,15, 532 crore in this quarter. Its CASA, or current account savings account, rose 15 percent YoY and 2 percent QoQ to Rs 1,33,525 crore while its term deposits have risen 14 percent YoY and 6 percent QoQ to Rs 1,82,007 crore in the reporting quarter.

Indian banks are recovering from the COVID-19 crisis, which rendered many Indians jobless. Now that the economy is recovering, credit offtake has improved significantly. According to Reserve Bank of India (RBI) data, bank credit registered a yearly growth of 16 percent in August.

Now that the festive season is around the corner, analysts expect banks to capitalise on higher spending and report healthy credit growth in the upcoming quarters as well. To fund credit growth, banks are also mobilising deposits by offering higher rates.

IndusInd Bank’s Kathpalia said that the bank is not planning to raise capital currently.

“We have enough capital right now to take care of our (loan) growth for the next 3-4 quarters and post that, we will evaluate if we need it,” he said.

The bank’s credit cost will be 120-150 basis points for FY23, he said.

Q2 results:

IndusInd Bank posted a 57 percent year-on-year rise in net profit this September quarter.

Its net profit was Rs 1,805.3 crore in Q2FY23 against Rs 1,146.7 crore in Q2FY22. The private lender’s net profit rose 10.6 percent quarter-on-quarter from Rs 1,631 crore in Q1FY23. Operating profit has gone up 10 percent YoY and 3 percent QoQ to Rs 3,554 crore.

Provisions fell 33 percent YoY to Rs 1,141 crore in Q2FY23 from Rs 1,706.9 crore in Q2FY22, and it fell 8.7 percent QoQ from Rs 1,250.9 crore in Q1FY23.

Its gross NPA as a percentage of its total loan book fell to 2.11 percent in Q2FY23 from 2.77 percent in Q2FY22, and from 2.35 percent in Q1FY23. The value of Gross NPA was Rs 5,567 crore in Q2FY23, which was a 10.8 percent YoY fall from Rs 6,245 crore in Q2FY22 and a 6.1 percent QoQ fall from Rs 5,932.9 crore. Its net NPA was 0.61 percent, which was a YoY fall of 19 bps and a QoQ fall of 6 bps.