EUR 120.00 For Business Accounts Only

MOSL:INDUSIND BANK: Building blocks for future; focus on Retailization to continue

We attended IIB’s analyst day where the management highlighted how the bank is focused on delivering sustainable growth in its key domain businesses and building a strong and granular franchise. The bank is further investing in building digital capabilities and new growth engines with a focus on delivering strong risk-adjusted returns. Alongside, it also unveiled the Planning Cycle 6 (PC-6) with a focus on expanding the key domain business, improving the liability franchise, scaling up new initiatives and offering Para banking services. Following are the key takeaways from the event:

 

Focus on sustainable growth; aims to deliver strong risk-adjusted returns

IIB remains committed in delivering a sustainable growth by focusing on constant improvement in liability franchise to make it more granular. The bank is aiming to reach a Retail deposits mix, as per LCR, to 45-46%. The focus will remain on further market share gains in the key domain business while simultaneously scaling up the new growth engines. Overall, the management is targeting a loan growth of 15-18% for FY23. The bank is further investing in building digital capabilities, maintaining healthy operating margins and has improved stress coverage that will enable it to focus on delivering strong risk- adjusted returns.

 

Unveiled PC-6 with a key focus on domain businesses

The bank unveiled PC-6 with a focus on: a) domain businesses (to form > 50%), b) increase in client acquisition (> 4m per year), c) market share gains in key businesses (Vehicles, MFI, SME, Cards, Deposits), d) scaling up of new initiatives (Digital 2.0, SME, Home loans, Private Baking), e) sustainability, and, f) Para Banking (to enter into AMC, Retail Broking and Non-life Insurance businesses). Overall, the bank is targeting a loan CAGR to be ahead of PC-5 with Retail to form 60%. CASA ratio would be >45% with PPoP to loans being >5.5% over FY23-26. Branch count to be >3k and customer base to increase to more than 50m.

 

Vehicle Finance and MFI to be the key growth drivers

The bank will continue to focus on its key businesses viz. Vehicle Finance and MFI. The endeavor will be to gain further market share across these segments. In Vehicle Finance, strong focus remains in high-yielding Tier II and III locations with Used Cars, CV, Tractors and New LCVs to be the key growth segments. In MFI, while the focus remains on JLG lending, individual loans are likely to be launched soon. Further, Bharat Super shop and Bharat Monet too are likely to see robust growth. Delinquencies, CE and DPD level continue to remain better than the industry in both these segments that will keep the credit costs under check. Overall, IIB is targeting a loan growth of 15-20% in Vehicle Finance, 25-30% in MFI and 12-15% in Gems and Jewelry