Indusind Q1FY19 Concall Summary



Banking Industry Developments:

  • Major event was increase of 50 basis points in G-secs rate. As a result, bond portfolios of banks were severely hit especially trading portfolios in money market and G-secs.
  • Monetary policy change led to hike of 25 basis points.
  • Rupee depreciated about 5% in the quarter itself leading to more volatility that presented an opportunity to offset the MTM hits that bank got.
  • For large borrowers, RBI introduced fixed loan component out of the working capital limits and the undrawn portion will have a 20% credit conversion factor.
  • Minimum Support prices were raised which lead to increase in inflation by 25 basis points.

Financial Results:

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  • Growth in Net Interest Income is 6% and loans is 4% q-o-q basis.
  • Growth in Net Interest Income is 20% and loans is 29% y-o-y basis.
  • Revenue Growth and net profit growth is 6% and 9% respectively.
  • Loan book growth was 29% year-on-year and 4% q-o-q where 30% growth in corporate loans and 28% growth in vehicle finance and non-vehicle retail businesses.
  • Above mentioned 29% growth is in spite of Rs. 8000 crores that were sold from corporate book.
  • CASA growth rate was 37% y-o-y basis, of which SA growth was 51%.
  • ROA growth was from 1.86% to 1.91%.
  • ROE has grown to 17.25%.
  • Cost-to-income ratio has gone down close to 44%.
  • Earnings per share has also gone up to annualized Rs. 69.
  • Net Interest Margin went down by 5 basis points.
  • Credit cost shrank from 19 basis points to 14 basis points.
  • The ARC book, SR book is at 33 basis points
  • The Weighted average Risk score (WARS) for vehicle portfolio of this quarter is 1.77 (1 being the best), indicating that credit cost will slightly improve in next few quarters.
  • The trading gains is Rs. 137 crores (fee line)
  • Net gains are Rs. 51 crores
  • Fee income has grown by 20%, but total free has grown by lower than that because of the fall in trading gains. Total fee is down from Rs. 181 crores to Rs. 111 crores because of that.
  • Core fee has grown y-o-y and q-o-q basis
  • Foreign exchange incomer has grown by 16%.
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Asset Quality

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  • Gross NPA is 1.15% which is lowest in industry.
  • Restructured book is lowest among industry at 5 basis points
  • Provisions absorbed the Rs. 86 crores mark to market quarter end loss
  • Slippages reduced from 2.68% to 1.31%
  • Provision coverage ratio is maintained at 56%.

Customer Base and Branch Growth:

  • Customer base is 12 million
  • 1 million new customers were added during the last quarter
  • 10 new branches are work in progress
  • Around 200 branches are on track to be opened in the full year

Mergers and Acquisition:

  • The acquisition of ISSL, ILFS Securities and Services Limited is signed and should be closed in this quarter
  • Bharat Financial merger is in its final leg and next step in to take approval from NCLT

Cost of Funds and Yield :

Indusind Q1FY19 Yield Cost Movement.png
  • Cost of deposit went up 22 basis points and cost of funds went up 35 basis points
  • Yield on asset went up by 30 basis points leading to NIM going down by 5%
  • Corporate yield has improved by 9 basis points and consumer yield has gone up by 4 basis points

Capital Consumption:

  • Risk-weighted asset to total asset ratio in last two years this quarter was 76% and 78% respectively, while it is 80% now.
  • Growth in credit risk RWAA is 6.12% q-o-y vs. 3.3% loan book growth
  • 33 base points comprise of 8 base points because of dividend payment and 25 base points on account of loan book growth which is BAU

Distribution Fees:

  • Distribution fees has gone up by 30% y-o-y basis
  • This is because of momentum for insurance and investment business
  • The fees also incorporate housing loans disbursal for HDFC

Vehicle Finance Market:

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  • Vehicle improvement is there in terms of freight rates and freight availability
  • Finance market is only 20% for two wheelers, rest 80% are in cash or credit cards
  • IndusInd Bank closes around 70,000 to 75,000 vehicles per month

Current Account Growth:

  • CA business growth is 2-3% only in over five quarters
  • Acquisitions need to be made to increase throughput to 20,000 from current 8,000-9,000 because of low average ticket size (Rs. 50,000 to Rs. 60,000)
  • The reason for slow growth is advancement in payments space and cash management space

OPEX Growth:

  • OPEX growth has been arrested to a low number even after opening 200 branches
  • Main reason is digitization related productivity gains leading to Rs. 200 crores being saved annually
  • Business has grown by 25-30% even after reducing headcount by 300
  • Cost to income ratio is targeted to be around 44%

Saving and Government Deposits:

  • Government deposits are 15% to 20% of overall balance sheet
  • SA will continue to grow at a stable rate.
  • Currently, 1,25,000 accounts are there and target is of 1,50,000

Home Markets:

  • Moving from 16 markets today to 18 this year


Other Concall Summaries of Indusind Bank

Ujjivan Financial Services Q4FY18 Concall Summary

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Financial Highlights

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  • Quarterly disbursement rose by 6% from previous quarter and 61% YoY to INR 2262 crores
  • The disbursement in the whole year grew by 13% in total to reach INR 8052 crores
  • The gross loan of the firm grew by 18.5 form March 2017
  • Firm through its operations has added 7.6 lakh new borrowers in the fiscal year
  • The share of MSE and housing finance saw twofold upsurge from the previous value of 2.4% to reach a figure of 7.3% , the major improvements came in the later part of the year
  • Net Interest income of the quarter grew by 24.8% from the previous quarter to reach INR 271.8 crores
  • Company healthy increase in the net margins which stood at 12.8 for the ending quarter up from 11.1% from the preceding quarter
  • Total credit cost of the year stood at INR 310.8 crores which was in line with the earlier predictions of the company
  • Both GNPA and NNPA of the firm has reduced since last quarter
  • The collection efficiency of the all the loans that had been passed since January 2017 is 99.6% which is good
  • Net Profit for the quarter stood at INR 64.9 crores which was considerably higher than the last quarter profits INR 29.3 crores
  • The ROA and ROE has improved since the last quarter and over the period of one year also since the last fiscal year
  • In coming three years time the company is eyeing for 33% business coming from the MFI and are expecting quarter of that to be secured loan


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  • The deposit base of the bank stood at INR 3772 crore as of March,2018 out of the total deposit base 3.7% was CASA and 11.3% were retail deposits. Company is optimistic of gaining more traction in the retail deposits
  • The company is eyeing for 25% of the total deposit base to come from the retail at the end of this fiscal year
  • Around 50% of the total loan advances in Q4 2018 were covered by the deposit base against only 36% in Q3 2018

Microfinance Business

  • The total microfinance disbursements in the Q4 stood at INR 1910 crores
  • The loan disbursed to the individuals grew by 31.6% and also the total disbursement grew by 1.8% over the last quarter
  • The company took cautious stance after the demonetization and only those branches were given go-ahead where the efficiency of collection were higher and had returned to normalcy
  • The business in the MFI domain would ramp up in the coming fiscal year

Cost of Funding

  • The average cost of funding the operations of the bank reduced by 140 basis point to remain at 9%, the improvement came as the strategic result of repayment of legacy loans and increasing the deposit base which was at considerably less rate of interest
  • However the cost to income ratio of the company has worsened from 53.1% in 2017 to 67.1% in 2018   
  • Company at the start of the fiscal year had legacy funding of 64% which they have repaid to some large extent
  • They are hopeful of repaying remaining 30% in the current fiscal year

Risk Management

  • Bank has invested heavily in the risk management practices in form of KYC and AML
  • They have a dedicated team of individuals who look after the risk management
  • The credit policies and risk management practices have been formulated keeping in mind the specific type of risk faced in the branches and clusters

Operating Expenses

  • Operating expense of in the year showed marginal increase in comparison to last year because most of the opened branches were of URC type and had very low cost impact
  • Also the company estimates of the operating costs at the beginning of the year matched significantly with the end year results
  • This year the cost to income ratio might increase by 3-4% owing to multiple branch openings


  •  More than 60% of the customers would be with the company for more than 2 years now and another 30% could be in between 1 to 2 years
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Other Concall Summaries of Ujjivan Financial Services

Yes Bank Q4FY18 Concall Summary

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Financial Highlights

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  • The total assets crossed Rs 3 trillion mark in the Q4
  • Both total deposits and total loan crossed INR 2 trillion mark
  • International banking asset clocked the level of $2.8 billion which they have booked in the GIFT CITY
  • The NPA of the bank improved to 1.28% as compared to 1.72% in the quarter ended in last December
  • The net credit cost for the year was curtailed to 76 basis point even when the overall market expectations stood somewhere between 100 to 120 basis point
  • The guidance for the net credit cost for the coming fiscal is set somewhere between 50 to 70 basis points
  • The dividend payout ratio to remain at 17.7% 
  • Net profit recorded an increase of 29% in Q4 to reach the figure of INR 11794 million and for the whole FY the net profit grew by26.9% 
  • Net interest income showed an improvement of 31.4% over the preceding quarter and on YoY basis it grew by 33.5%
  • Income from non-interest services increased to INR 14210 million with an improvement of 13% over the preceding quarter
  • Cost to income ratio for the whole year improved by 1.2% to remain at 40.2% in comparison to the last fiscal year
  • ROA for the year stood at 1.6% and ROE for the year stood at 17.7% 
  • Total assets of the bank grew by 45.3% in the year to surpass the 3 trillion mark
  • Offshore assets through International Business Unit of the bank grew by 166% YoY
  • With a sequential growth of 90% and YoY of 54.1% the corporate business across the eight relationships groups stood 67.9% at the end of the Q4
  • Bank was able to maintain a healthy capital adequacy ratio of 18.4%
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  • Yes bank has been ranked overall #2 by the Ministry of Electronics and Information Technology across all bank segments
  • German Agency OEKOM research awarded YES bank the prime status which made it the only Indian bank to receive such a recognition


  • Funds through perpetual bonds of Rs 54.15 billion and Rs 70 billion of Tier-II bonds were raised

Risk Weighted Assets

  • Total risk weighted assets of the bank stood at INR 2.55 trillion
  • The ratio of the RWA to the total assets improved by 5% in the year
  • Bank has target of bringing the RWA to the total assets to 70%


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  • Sequential improvement in NPA from 0.93% to 0.64%
  • The PCR coverage at present is 50% with an improvement of 3.6% from the December
  • The Bank has set a target to raise the PCR to 60% by September

Asset Quality Composition

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  • Portfolio of the security receipts improved from 1.06% to 0.92% sequentially from December
  • Out of total outstanding security receipts of INR 18.8 billion recovery of 35-40% is expected in the FY 2018-19


  • YES Bank has exposure to only two accounts out 12 as listed by the RBI, and only accounted for 0.16% of the total advances
  • The provisioning coverage on the two accounts remains at 50%
  • In NCLT-II YES bank has exposure to the 7 bank accounts out of 28
  • Total loan amount for 7 accounts stood at Rs 6.5 billion with three major accounts amounting to Rs 5.7 billion
  • The provisioning coverage on 7 accounts remains at 43% 

Corporate Portfolio

  • The overall value of the corporate advances stood at 67.9% of the total advances
  • The sensitive sectors as classified by the bank are energy and power sector, Iron and steel, Telecom and gems and jewelry
  • 80% of the corporate portfolio has been rated A

Infrastructure and HR Resources

  • Bank has a total of 1100 branches and ATM network of 1724
  • Total headcount of the human resources stood at 18238
  • In order to improve the service levels, quality assurances and turnaround time back-office operations of the bank would be shifted to 700000 sq.ft. centralized center in Chennai


Other Concall Summaries of Yes Bank



Axis Bank Q2FY18 Concall Summary

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 Financial Highlights

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  • Tier-1 capital has been declining and is at 118% at the end of Q2 as compared to 287% at the end of FY ’11.
  • Made additional provisions of Rs.505 Crores in this quarter towards the various lists of IBC accounts.
  • Trading income for the quarter has been Rs.377 crores.
  • Axis Bank’s retail fee grew at a CAGR of 19% over the last 4 years and has turned into more annuity based.
  • Operating expenses growth normalized to 13% YoY.
  • Operating profit margin has been 2.39% compared to 2.95% in Q2 last year and 2.87% in Q1 if this FY.
  • Cost to average assets was at 2.17% for the quarter.
  • Provision coverage ratio has been 60% for Axis bank.
  • Cost of fund stood at 5.18% compared to 5.24% in Q1 and 5.68% in Q2.
  • Net profit grew by 36% YoY to Rs.432 crores. Net interest income has been 3.45% for the quarter with domestic net interest income at 3.71%.
  • Gross slippage for the Quarter
  • Axis Bank’s ROE and ROA for the first half has been 6.852% and 0.57% respectively.

Operational Results:

  • Overall CASA balances grew by 24% YoY, although CASA ratio stood at 50% and CASA ratio of total deposits has been 46%.
  • CASA retail term deposits formed a strong base at 83% of total deposits and are Up by 224 basis points YoY.
  • The CAR (Capital adequacy ratio) stood at 16.32% with a tier 1 capital of 12.36% and a CETI of 10.95%.
  • Loan growth has been largely driven by 23% increase in retail and 15% in SME. Also, retail fee grew at 23% whichcontributed 48% from total fee income.
  • Axis bank’s saving account balance and current account balance grew by 21% and 28% YoY and by 7% and 11% QoQ respectively.
  • Net interest margin for the first half of this FY has been 3.53% compared to last year average of 3.67%.
  • Axis bank’s short term non-fund exposure in telecom is near to Rs.8000 crores and that too is among the top 3 players so, that is AAA or AA.
  • Only 10% of Axis bank’s outstanding loan is under base rate.
  • Fee income growth has been healthy at 12% and constituted 30% of operating revenue.
  • Share of fee from cards has increased from 26% in FY ’13 to 39% in FY ’17. Also, card fee has grown by 36% YoY.
  • Growth is driven by small business banking and education loans which continue to grow at 79% and 115% respectively.
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  • Axis Bank opened 100 new branches in this Quarter.
  • Axis Finance’s loan book growth YoY was 65% in first half, Revenue growth YoY was 19% to Rs.341 crores and PAT grew to Rs.101 crores.
  • Axis Capital reported 5 times increase in value of deals executed during the quarter to Rs.11021 crores. Also, Revenue growth was 21% to Rs.152 crores and PAT growth was 39% to Rs.688 crores for the same
  • Axis Securities, the broking business currently is in top 3 brokers in India, Client base increases by 37% in H1, total revenue growth was 32% to Rs.438 crores, led by 37% increase in broking revenue. Also, the PAT grew by 44% to Rs.26 crores.
  • Axis AMC, reported 46% YoY growth during the quarter, led by 23% YoY rise in number of client-folios.
  • 86% of the corporate slippage is contributed by the pool that is BB or below.
  • Axis bank’s spend has been about Rs.10000 crores through credit cards in this quarter.
  • Axis bank’s term deposit cost has dropped by 19 basis points in this quarter.
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Asset Quality

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  • Gross NPA ratio stood at 5.9% at the end of Sep ‘17which is Rs.27000 crores (Rs.22000 crores from corporate and Rs.5000 crores from SMEs)as compared to 5.03% at the end of June ’17.
  • Lending at BB or below level is about 11% so, corporate exposure is about Rs.20000 crores.
  • Net NPA ratio has increased from 2.3% in June ’17 to 3.12% in Sep ’17.
  • 9 Accounts (amounting to Rs.40000 crores) were reclassified by RBI which is about 6% of total outstanding accounts being classified as NPAs across the sector, worth of these accounts amount to Rs.4867 crores.8 of these accounts are consortium accounts.
  • Out of the 9, one is from steel sector of Rs.1128 crores, power sector has 3 accounts of net Rs.1685 crores, 1 account is from IT/ITES sector of Rs.1143 crores and the remaining 4 comprise Rs.911 crores.
  • Rs.1600 crores is part of the restructured dispensation.
  • PBDD created of Rs.1618 crores for these 9 accounts during this quarter. Maintaining a provision coverage ratio in 60-65% range.
  • Total non-fund based exposure on these 9 accounts has been Rs.900 crores.
  • In Q2, total slippage from the corporate book was Rs.8110 crores of which 73% came from accounts which were rated BB or worse in the previous quarter.
  • Rs.17700 crores are the net power exposure excluding the NPAs of Rs.3300 crores
  • NPA of Rs.3300 crores have been accounted from power sector with provisional coverage of 45%.
  • Telecom is not part of Axis bank’s top 10 industry segment and is just 1% of overall exposure totaling to Rs.2500 crores.
  • Outstanding BB exposure in this quarter has been Rs. 3500 crores driven by slippage in upgradation and down-gradation of loans from BBB to BB (net downgrades in range of 1500 to 2300 crores).

Strategies and Challenges:

  • Acquisition of Freecharge will help AXIS bank in further augmenting its digital capabilities. Also, it will help Axis bank capture the unique preposition offered by fintech and wallet companies.
  • Freecharge has a user base of 54 million with gross merchandise value of Rs.7200 crores and 213 million transactions.
  • Axis banks accelerated recognition of NPLs, provided with reduction in overall stressed assets.
  • Strong retail franchises had been the driving force for the financial performance for the company.
  • Focus has been on providing loans for affordable housing, thus disbursed loans to 32673 families by Aug 2017.
  • Retail loan sourcing is mostly driven by internal customers, contributing 72% in Q2. Also, 97% of the credit cards and 78% of personal loans also originated from existing customers.
  • 50% sourcing is through branches; hence, Axis Bank is focusing on developing a deeper branch network.
  • Incremental sanctions to Corporates with 85% of the loans to companies rated A or better.
  • 87% of advances are to power generation, of which 78% to coal based. Also, out of these projects 85% are operational as of Sep 30, 2017.
  • If the asset is standard in power sector then, it will keep generating interest. So, if a account is paying normally then, it will have a AAA rating otherwise it will have a BB rating.
  • In SME sector focus has been to drive growth by quality of the book.


  • Loan growth momentum is back upto some level driven by pickup across all segments specially working capital loan segment.
  • Working capital loans grew by 36% YoY.
  • High slippage in this quarter due to divergence in their annual review process.
  • Axis bank has been ranked in the top 10 most valuable brands in India in this quarter.
  • Axis bank continues to keep a leadership position in transactions and payments space.
  • 60% of the customers are digitally active and 40% prefer only mobile app with mobile terminal being used 4 times more than the internet terminal.
  • Axis Bank’s debt and capital markets platform continues to be a market leader. Also, Axis bank is continuing to top Bloomberg league table for corporate bonds for the 10th consecutive year.
  • Axis bank is expecting higher volatility in margins.

Growth and Market Share:

  • Axis bank has been ranked #2 in mobile banking spends as per the latest RBI data.
  • Axis’s Term deposits grew by 2% and wholesale term deposit grew by 3%. 
  • Retail term deposits, excluding FCNRB grew by 8% in the quarter, Retail loans grew at 23%.
  • Overall deposit growth for the quarter stood at 10% YoY.
  • Near about 7% credit growth in this quarter and stood at 16% YoY. Corporate loan growth has been up by 10% YoY and in Q2 from 3% in previous quarter.
  • Working capital loan grew by 36% YoY.
  • Axis Bank’s Credit card, personal loans and auto loans grew by 51%, 36% and 33% respectively.
  • SME loans are also growing at a faster pace than before.
  • The bank has 3.8 million credit cards working at the end of this Quarter. Thus, having the 4th largest credit card base in the country with a market share of 11%.
  • Credit card spend grew by 56% YoY to Rs.9915 crores and Debit card spend grew by 84% YoY to Rs.7564 crores.
  • Overall digital transaction increased by 42% YoY.
  • Mobile banking spends in Q2 increased by 78% YoY driven by 29% growth in transaction volumes.
  • Among the first four banks to go live on UPI platform, helped in creation of more than 2.1 million virtual payment addresses. Axis has 4.5 million registered customer base.
  • Axis Bank has been ranked 2nd in mobile banking benchmarking for functionality by Forrester’s in 2017 for all Indian Banks.
  • Axis bank is the 2nd largest acquirer of POS (point of sale) terminals with a n installed base of 4.7 lakh terminals.
  • Axis Bank’s bond share in Indian bond market has been 22% compared to 18% for the same period in last year.
  • Loan growth in SME sector has been 15% YoY. Also, the growth has been broad based as term loans and Working capital loans both grew by 18% and 14% respectively.
  • Share of Working capital in overall SME loan stands at 78%.
  • Share of retail loan stood at 45% of total loans in Q2.
  • Share of home loans in the overall retail book have come down steadily from 54% in FY ’13 which is now stand at 43% in Q2.


Federal Bank Q2FY18 Concall Summary

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Financial Highlights

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  • Seventh sequential quarter of operating profit improvement
  • Operating profit in last four quarters has grown each one being better than the previous
  • Different businesses of Federal Bank have grown between 5% to 6% sequentially

Overall Growth in Business

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  • The company did 45% more business in terms of new business in deposit clients, retail clients in Q2FY18
  • Average was account opening was about 200,000 accounts in a quarter. This quarter bank opened 290,000 accounts
  • All the four businesses have seen 5% or more growtThe blended 25% growth will continue
  • There are no one offs, no transactions bank either sold or bought. So the growth was led by organic improvements
  • Company will maintain rate of growth in all  businesses  in the mid twenties unless it finds an opportunity to pick up a good portfolio at a price that is valuable
  • 55% to 60% of the business is in mid market, SME and commercial banking and that is expected to continue
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Market penetration strategy

  •  Bank’s approach has been distribution heavy branch light
  • Bank hasn’t added footprint in terms of branches for two years
  • Bank focused consistently on its presence in the newer geographies through their campaign and other outreach activities
  • Campaign related expenses this quarter were Rs. 10 crores and this number to remain same in Q3 & Q4
  • Bank has added presence, reach, distribution, feet on street, RM, Digital, activating Fedfina

Credit Growth

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  • Company faced challenges in credit quality at end of Q1 because of one large corporate
  • If we back out this one company there has been consistent improvement in credit quality
  • Company has steadfastly stayed away from risky sectors,once it gained confidence it put people of the right profile who can drive the growth
  • Credit to cost guidance for next two quarters is expected to have similar run rate or slightly better than where the bank is at present

Retail business

Retail Growth

  •  97% of the book is retail deposits
  • Retail sequentially grew more than 5% all organic this quarter
  • Bank experienced 3x of the rate of growth of network in SME and Retail
  • Retail origination increased to Rs 1688 crore this quarter as compared to Rs 1,000 crores in last quarter
  • 91% of retail disbursements is by bank

Retail Portfolio

  • Retail book is largely home loans and loans against property
  • Retail does not have any unsecured portfolio
  • Retail book geographical breakup currently Kerala to outside Kerala is around 55:45

Retail NPAs

  •  Increase in Retail NPAs largely because of demonetization and the consequence of having to pay a ballooned amount in the end of Q1 and the middle of Q2
  • Retail in particularly in Kerala is impacted by the NR remittances related payments
  • Bank had to pay bulk five dues as opposed to usually paying one or two dues
  • Incremental slippage in retail and non education loan started trending down, in Q2 first month and half was the worst because that was the last month of  dispensation
  • The second month and a half was way better and that momentum will continue into Q3 and Q4.

Corporate Banking

  • Corporate bank portfolio - large institutions, large corporate, emerging corporate, local corporate
  • Average turnover of corporate clients is about Rs. 400 crores and above
  • Average ticket size is about Rs. 40 to 60 Cr.
  • Blended yield is close to about 9 quarter


  •  Fedfina is now beginning to contribute about closer to Rs. 150 crores of credit origination in a month
  • Fedfina has four lines of business.
  1. One is it to originate loans for the bank which is written by the bank. There it operates as a DSA.
  2. They do gold loans.
  3. They do loan against property and construction finance on their books.
  • Fedfina’s book is about Rs. 1,300 crores and is growing quite well
  • Last year Fedfina made a profit of 25 crores and in the first half it made around 15 crores

External investment for Fedfina

  • Company is in very advanced stage of discussion, boiling down to two - three serious investor opportunities
  • Company is looking for fresh infusion and not OFS (Offer for sale)

Housing finance book

  • Housing book will be slightly on the floor as itis much higher weighted outside. But on the stock it will be almost half/half
  • Housing book yield is around Rs. 920 crores - 925 crores.


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  • NPA  is 140 crores
  • Standard advance is 20 crores
  • Income tax is 143 crores

For first half of FY18

  • 230 crores NPA
  • 111 crores for tax
  • 3 crores for standard advances


  • The slippage in retail and in Agri in this quarter was almost Rs. 150 crores
  • Slippages in Agri have moved up to Rs. 50 crores and will normalize around that
  • Slippages in SME trended down from Rs. 154 crores to Rs. 106 crore
  • Recovery upgrade is Rs. 163 crores
  • Write off is Rs. 50.22 crores

Reason for slippages

Slippage due to

  • Demonetization led dispensation and the farm loan waivers
  • Negative impact significantly pronounced in Kerala where bank has a larger share and also the state is going through its challenges
  • SME loans in certain geographies in Kerala which was impacted by cashew, rubber and the local business  have been recognized as NPA so the residual portfolio is relatively less challenged
  • Certain set of waivers are expected as of 31st of October for student loans in Kerala which could have impact on slippages on education loans

Cost of borrowing

  •  Cost of borrowing is less than the retail term deposits and about 40 basis points benefit on account of CRR
  • Bank has SLR benefit also because this borrowing isrefinance taken by one of the eligible institutions and that has replaced the purchaser means the CD issuance and the bulk deposits.
  • Refinance amount is Rs.20 million

Cost to income ratio

  • Cost to income ratio should be 50% to 51% as the run rate for the next six quarters
  • Bank plans to invest in lot of areas and build franchise

Yield on loans

  • Yield on loans has fallen steadily down around 300 basis points YoY and QoQ also down 45 basis points
  • Net Interest margin in first half is 325 crores
  • NIM for second half is projected to be between Rs. 320 – 325 crores
  • Bank is focussing on controlling regularity of credit growth, quality of credit growth, therefore lower reversals, higher CD ratio and mix of products
  • Regulatory points in terms of NCLR and the change in pricing and external benchmark may impact the yields
  • The benefit of capital on yield increase is about 5 to 6 basis points

Loan mix

  •  Loan mix opportunities – lower end and mid-market opportunities
  • Composition of products in mid market and SME is a good opportunity that produces a higher yield compared to the corporate or the home loan kind of market

Rating of corporate loans

  • 70% of incremental origination is rated A and above

Impact of IndAS

Risk weighted Assets

  •  Company is trying to move away from ROA to risk weighted
  • Companies risk weighted assets is 1.4 and the IndAS numbers are going to be all risk weighted related
  • Company is awaiting the final guidelines from Reserve Bank of India on credit side ECL
  • Positive impact could be in the form of valuation of securities and amortization of discounts

GST impact on SME

  • Federal Bank is positioned to be the most admired digitally enabled mid market SME bank of the country

Organisation structure

  • Verticals have been created and each of the heads are driving their verticals
  1. Business banking head
  2. Commercial banking head
  3. Mid market large corporate head


  • OPEX was 11% in Q4 of ‟17, it went to 14% and now it is at 18%
  • Q1 typically tends to be the lower expense quarter
  • Components of operating expenses
  1. Investments done on branding side
  2. Distribution related expenses on Fedfina and DSAs
  3. Three months services charges for retail portfolio acquired last year
  • Retraining and remobilizing staff for customer service under program called Atithi DevoBhava


  • Pre-demonetization there was about 20% Y-o-Y growth in savings
  • Post demonetization CASA momentum has slowed
  • Quarter we ended post demon CASA was about Rs. 32,000 crores and this quarter we it is about Rs. 31,500 odd crores
  • In Kerala where bank enjoyed highest growth there is certain degree of slowdown
  • Non Kerala growth has moved up almost 700 basis points higher than our past run rate
  • This quarter savings have grown by 6% and on full year basis it will grow by 20%
  • Bank does not have plans to price higher to get higher share
  • Average current account growth has been more than 14%

Core Fees

  • Distribution or commission related fees w.r.t Mutual Funds and Investments have grown just 9% YoY
  • Distribution of Mutual Funds is just improving and bank is going to put more efforts in the vertical in second half of FY18 and in FY19
  • FX has done well
  • Company is focusing on

o Fees on credit processing

o Processing fee and commission exchange brokerage in terms of the insurance business, mutual fund business

Consumption of capital

  • Company will consume another 200 basis points in the next 24 months and that will bring it to somewhere in the mid 12
  • Company will look at time opportunity situation, the willingness of the market to support for future spending of capital
  • The bank will wait for Tier 1 bond opportunities

Exposure to IBC referred cases

  • Federal Bank has investment exposure of only one company Amtek Auto among those referred by IBC
  • On the investment 50% provided, on the credit 100% provided.
  • Total exposure investment (15 crores)  plus credit is Rs. 22 crores


  • 77% of the book is in MCLR


  • 60% plus accounts opened in this quarter are by digital instant account openings

Employee expenses

  • Last quarter Federal bank had rolled out cost to company model the top 700 employees
  • The rest of the employees are in IBA terms
  • Company is calculating the OPEX change due to this model and is expecting that to be about 15% which is being factored into budget
  • Employee cost has gone up by 6% YoY

Security Receipts

  •  Book value of security receipts was around Rs. 873 crores
  • Provision of Rs. 5 crore was made.


Indusind Q1FY18 Concall Summary


 Financial Highlights

Indusind Q1FY18 Financial performance.png
  • Interest income grew by 31%
  • Core fee grew by 25% with steady cost income ratios
  • Growth in PAT was 26% with INR 837 crore without considering the reversal of INR 122 crore of standard asset provision into profits
  • CAR has improved from 15.31% in last quarter to 16.18% this quarter
  • Loans grew by 24% with 22% in retail growth and 26% in corporate growth and also, deposits grew by 31% for the quarter, thus improving the overall credit-deposit ratio
  • In the retail side, vehicle and non-vehicle grew by 17% and 35% respectively
  • CASA grew by 44% and SA demonstrated a consistent healthy growth of 65%
  • NPA is INR 31 crore with a provision of INR 28 crore
  • Q1 disbursement on the vehicle finance book was INR 5,274 crores, was slightly lower by 4.4% versus INR 5,500 crores in last year
  • Out of total CA of INR 20,000 crore, 50% is retail, 20%-30% is IPO money and remaining is corporate
  • Gross NPA increased from 0.93% to 1.09% due to the movement of two accounts from restructured book to GNPA book, where restructured book fell from 0.37% to 0.17% over the quarter
  • In the microfinance portfolio, the banks consider INR 50 crore as NPA which is expected to come down to INR 20 crore to INR 25 crore over the end of the quarter
  • The bank is expecting to provide INR 10 crores on microfinance
  • Strong growth in SA is attributed to the fact that, the bank is getting strong customer growth of around 90,000 new customers per month and with an improved ticket size of INR 60,000 per account
Indusint Bank Q1YFY18 Key Metrics.png

Economic Reforms:

  • GST will provide sort of a tax audit trail and lead to improved productivity
  • Reforms are GST and IBC will create a short-term turbulence but possess massive implications to the economy

 Developments in Banking Industry:

  • With the Banking Regulation (Amendment) Ordinance, banks have been advised to make a provision of 50% on the secured portfolio and 100% on the unsecured portfolio as soon as the account gets admitted in the NCLT
  • sector growth continues to be anaemic at 5% to 6%, retail has still got some buoyancy at 14%, but corporate is negative
  • Bond market grew by 20%, and so the growth of the combined sector along with the bond market demonstrated a growth rate of 9%-10%
  • As per the recent guidelines by RBI, banks are supposed to put 50% provision on secured loans and 100% provisions on unsecured loans from Q2 onwards
  • SA part of CASA ratio is more steady and predictable while CA is subjected to volatility and so predictions are not easy

Asset Quality:

Indusind Q1FY18 Asset Quality.png
  • Improved risk profile through focus on high quality assets has led to the improved capital ratios
  • The bank’s rating profile has improved with the strategy through short-term working capital loans which are better priced
  • The combination of yields holding up on the asset side of the book and falling cost of deposits are contributing to the net increase in margins
  • The Bank’s strategy about healthy books are positively impacting the capital adequacy and capital consumption of the bank.
  • The bank possess exposure in 3 out of 12 accounts declared defaulted through IBC
  • Exposure to the telecom sector has been reduced to 2.1% this quarter from 3.5% in the last quarter with none of the telecom exposure rated below A rating
  • The bank has increased the standard asset provision in telecom sector from 40 bps to 75 bps, thus taking an impact of INR 8 crores
  • Combined restructured plus GNPA reduced from 130 bps last quarter to 126 bps this quarter
  • Risk weightage has not grown to the same extent as the loan book grew by 3% while the risk weightages grew by 1% due to the shift in rating profile of the corporate book towards AAA and AA+ ratings
  • In order to reduce the share of top 20 depositors in the bank w.r.t. to total deposits, the bank is trying to put a cap of around INR 700 crores, so that any account will not be allowed beyond that
Indusind bank Q1FY18 Loan book.png
Indusind bank Q1FY18 corp loan book.png

Provision Coverage:

  • The company normally provides provision of 60% on NPAs
  • Out of INR 122 crore held as provision, INR 70 crore is floating provision, INR 33 crore is the provision on standard asset, INR 10 crore is used to accelerate provisioning in Security Receipts and INR 10 crore is used on microfinance portfolio
  • Due to the given measures, provision coverage ratio exceeded 60%

Growth Prospects:

  • Growth in the Q2 is expected to remain the same, but the bank is expecting double digit growth in Q3 onwards on the Microfinance sector
  • Similar growth is expected till Q2, but expectations for Q3 and Q4 are kept higher because of the expected growth in supply side from vehicle manufacturers
  • Showed a healthy loan growth of 24% despite policy reforms in some sectors and demonetization
  • The Bank is not looking for any acquisitions in the short term and is focused towards development with the organic growth rather than inorganic one
  • CA in the retail part is at INR 7 crore per branch and is expected to show promising growth due to increase in branch network
  • The bank’s M&HCV book grew by about 13% while the vehicle finance book as a whole grew by almost 17% due to slow quarter growth in CV, which was mainly impacted by the supply side issues due to BS IV norms
  • Number of employees at the end of the quarter is 25,413 as compared to 25,612 in the last quarter and is mainly affected by the relocation of employees and reduction of employees per branch to half
  • Although market risk has gone up but returns are steady, because of the SLR book going up and government securities rate going down


Indusind Q4FY17 Concall Summary


Financial highlights 

Indusind Q4FY17 Financial Performance.png
Indusind FY17 FInancial Performance.png
  • Consistent interest margin of 4% for the past three quarters
  • During Planning Cycle 3, firm has doubled its number of branches, client base and the profits as well.
  • Earlier, the bank has showed its competence by achieving the bank’s doubling goal during PC 2 as well
  • Achieved a loan growth of 27% over the cycle
  • CASA ratiohas over-shoot the target of 36% and grew at 43% in Q4
  • SA grew at 57% in Q4
  • Fee growth has exceeded the loan growth
  • Global markets revenue crossed $0.5 billion
  • Operating profit growth of 37%, which is highest among all the quarters for the past 2-3 years
  • Net profit grew at 21% over the quarter and 25% for FY17 and the gap in the operating profit and net profit is due to issuance of unexpected provision of INR 122 crore on a standard loan, whose reversal is expected to happen in quarter 1 again
  • The Bank has achieved a revenue growth of 32%, fueled by the interest income growth of 31% and fee growth of 33%
  • Considering high growth of fee due to high contribution of trading part in quarter four, the bank achieved 29% fee growth excluding the trading part of fee
  • Achieved a credit growth of 28%
  • Net NPA remained at 39 bp and gross NPA fell slightly by 1 bp and hadshowed steady Net and gross NPA with stable provision coverage ratio
  • QoQ growth in FY17 was 6%, 19%, 11% and 15%
  • Improvement on the working capital financing side is due to the increased competitiveness of the bank on the pricing based on tenure due to MCLR regime
  • ROA was affected due to flat profit QoQ
  • The Bank is planning from current 70%-30% ratio of retail vehicle – Non-vehicle loans, to 50%-50% ratio over the next planning cycle
  • Net slippage for the quarter was INR 84 crore
  • Improved restructured advances may signify increase in the NPAs if the restructuring fails
  • In spite of high operational risks involved in Q4, CRAR remained flat at 15.31% and Tier-1 at 14.72%
  • Th distribution fee grew by 74%
  • Current ROE grew at 16%
Indusind Q4FY17 KeY Metrics.png

 Business updates

  • The Bank’s corporate business grew faster than the retail business due to increased competence on pricing
  • Opened 125 branches over the quarter 

Economic highlights:

  • Fiscal deficit target brought down from 3.4% to 3.2%
  • Impact of RBI policy on market policy lead to change in stand from accommodative to neutral
  • Setting up of Standard Deposit Facility will help in absorbing excess liquidity (Eg- reverse repo has high liquidity) from the market and banks will be given relief on interest payment
  • Rupee appreciated by almost 5.2% in the quarter
  • US fed rate went up
  • Growth forecast of India by IMF is revised from 3.6% to 3.4% 

Banking Industry Highlights:

  • RBI has now allowed banks to amortize for four quarters any losses on the sale to ARC
  • Q4 involves lot of operational risk for every bank in the industry
  • Although certain parts of India have lot of indebtedness due to microfinance loans but now around 95% of the borrowers are consistently being evaluated based on CIBIL scores, so that creditor will know that
  • Microfinance infrastructure in the industry is still developing, even after top 15 players in the industry, the quality goes significantly down in terms of processes and building capacities
  • Farm loan waiver being done in few states during state elections in UP, if spread to microfinance industry as well then it may have a significant impact on the industry’s revenue as a whole
  • Macros are expected to remain stable, which will lead to gentle interest rate regime due to stable inflation regime  

Bank’s highlights:

Indusind Q4FY17 Corporate Loan book.png
  • During PC 2, the bank has doubled its number of branches from 300 to 600 and again during PC 3, bank was successful in doubling its branches from 600 to 1200
  • The bank has its largest sector as gems and jewellery but don’t possess any concentration risk as such
  • The bank showed significant traction of new-to-bank customers post demonetization
  • The bank wrote down heavily on two accounts it sold to an ARC and chose not to amortize it, thus impacting the cost of credit
  • Firm has seen slight improvement in the gross NPA in the retail
  • Over the past few months around March ’17, bank raisedAdditional Tier -1 capital of INR 2000 crore
  • The bank possess 3 million customers in Vehicle Finance,5.5 million customers in Retail Consumer bank and 1.2 million customers in the Microfinance 
  • Indusind is selling 3.6 consumer bank products per customer on an average
  • A lot of money from savings accounts also moving into alternate assets.
  • Branch size will be reduced to half from current 2500 sq. ft in metro to around 1200 sq. ft in the upcoming branches which leads to staff reduction from 23 to 12employees
  • The Company has acquired top position in terms of total number of deals on the debt side
  • Payment products, lending products and saving products, all three over time we are going to become viable.
  • The Company is not much affected by the BS-4 norms for vehicles because all the vehicles sold till march were based on BS-3 norms only
  • But BS-4 norms will impact the bank’s another business of used-vehicle financing in the near term
  • The bank’s loss given default in vehicle portfolio is just 30% over the past 10 years
  • IndAS is affecting the bottom line of the bank by around 4% along with some release from the provisioning norms
  • The bank currently has partnerships with 11 out of top 15 microfinance firms
  • Operating at a cost to income ratio of around 45%
  • The bank is trying to force its way to become more efficient on capital and therefore take lesser risk in the process by leveraging price competence and balancing corporate retail book
  • GST would make the logistics business more efficient resulting into more warehousing and high usage of LCV, with increased capacity of MHCV and HCV, thus gives a positive outlook of the vehicle sales and the bank’s business
Indusind Q4FY17 NPA Movement.png

Planning Cycle 4

  • Intend to use “4D” strategy as Digitized to Differentiate, Diversify, and create Domain Leadership so as to double clients, loans and profits
  • Continue to focus on livelihoods loans because livelihood loans have lower delinquency
  • the rebalancing of the loan book:
    • Rebalancing of loan book to achieve 50-50 ratio between corporate and retail bank and 50-50 for vehicle and non-vehicle loans over a period of three years
    • Higher yield retail book tend to support margins and helps in improving the return on risk weighted assets (RORWA)
INdusind Q4FY17 Loan Book.png
  • Rural Banking and Microfinance: 350 out of 1200 branches of banks are in rural areas and the goal is to generate atleast 10% of total profits from these over the cycle
  • Improved focus on the bank’s overall Productivity through set of initiatives
  • Digitization of businesses, especially in the back office to improve the productivity in processes: Goal is to achieve 14% of bank’s profits by 2020 through initiatives in this space
  • Improving the client experience in the real world
  • Improving Internal collaboration and cross sell: Bank sells 3.6 consumer bank product per customer on an average, so now the goal is to get into selling non-banking products like vehicles so as to improve the profitability of the bank as a whole
  • Sustainability: It is not just about environment and social impact but also about governance and regulatory compliance to be fully sustainable
  • Increasing the number of branches to over 2000 and doubling the customer base to over 20 million
  • To become sustainable in rural banking, the main verticals to focus are agri-finance, vehicle finance, micro-finance and branch banking, so as to achieve 10% profit share from rural banking
  • Reducing the cost to income ratio by at least 2% through means of productivity improvement, reduction in customer acquisition costs, decreasing branch cost due to shrinking size and reduction in depreciation of branches and IT assets along with the increase in digitization
  • Would maintain the ROE at 20% from 16% and targeting a stable RORWA of 2.4%


Axis Bank Q4FY17 Concall Summary

Axis Bank.png

Performance Highlights

Axis Bank Q4FY17 Financial Perfirmance.png
  • The growth in CASA balances is 26% yoy and 21% qoq. The CASA ratio stands at 51%
  • Savings and current accounts grew at 19%/37% yoy and 7%/49% qoq. The sharp rise in liquidity is due to demonitisation
  • QoQ Growth in the retail loan book is at 12% with SME advances growth rate at 14% whilethe YoY growth in the retail loan book is at 21% and SME advances growth rate at 10%.
  • Gross slippages has increased from 4560 cr. in Q3FY17 to 4811cr. Net slippages have decreased from 4210 cr. to 2008 cr. Provision Coverage stands at 65%.
  • Credit cost for the quarter is 1.73% while for the full year it is at 2.82%.
  • There has been a 111% increase in PAT and 27% increase in core operating profits. However, profit for the quarter and year have reduced by 43% and 55% respectively.
  • The tier 1 capital ratio has reduced from 12.51% to 11.87% at the end of FY16.
  • The total number of branch additions are 93 taking the total to 400.

Indian banking scenario

  • India’s FY 17 GDP growth rate is expected to be 7.1% with union budget fixing fiscal deficit at 3.2% for FY18 and impact of demonitisation reduced in many areas.
  • The primary issues facing the industry are slowdown in capex activity and high leverage in corporate balance sheets which have caused credit demand and growth to be subdued.
  • Demonitisation has led to excess liquidity in the market which resulted in aggregate system deposit growth of 13% yoy.
  • The company expects investments to be modest in the first half of FY18 with a gradual revive in capex with spends on affordable housing, renewable energy etc.

Digital Platform Growth

  • The YoY increase in digital transaction volumes are 7% while mobile spends in Q4FY17 has seen a growth of 76% with transaction volumes increasing 54% in the same quarter.
  • Cards portfolio spends in Q4FY17 has increased 83% yoyto 17157 cr. with the bank being the 4th largest credit card issuer with a market share of 11%


  • The loan growth is at 10% yoy which has been largely driven by retail and SME sectors with retail lending showing a strong growth of 22% which exclude loans against FCNR(B) deposits.
  • The SME loan growth stands at 10% yoy and 14% qoq.
  • Corporate advances are flat with demand for corporate credit being blank.

Asset Quality

  • One account with loan outstanding of Rs 1661 cr. in the cement sector was downgraded and successfully upgraded in the same quarter which has resulted in a 25% provision against the loan outstanding.
  • Gross NPA ratio has decreased to 5.04% from 5.2% with the net NPA ratio decreasing from 2.18% to 2.11% at the end of December.
  • The watchlist has reduced to 2.28% of customer assets (9436 cr.) from 2.83% of assets.
  • Total slippages from the corporate lending portfolio stand at 4320 cr. for the quarter.
  • 83% of the total slippages came from the watchlistportfolio. 58% of this list has sunk to NPAs
  • The key sectors which contributed to the slippages from the watchlist portfolio are metals, infrastructure, engineering and electronics. Total recoveries and upgrades stand at 2804 cr.
  • 5260 cr. was recognized as NPA in Q1 and Q2 of FY17, 1811 cr. in Q3FY17 and the remaining 2407 cr. remains standard on 31st Mar. 2017.
  • The bank has implemented SDR in 5 standard accounts with the underlying loan amount being 1293 cr. with a provision of 15% on the entire pool.
  • The 480 cr. on movement of SDR accounts to slippage to NPAs.
  • Provision of 199 cr. in standard assets which has been created due to a negative standard asset provisioning due to slippages minus the loan book and the 25% provision amount.
  • The bank has sold assets worth 2354 cr. with net book value of 1828 cr. to ARCs again a sale consideration of 1628 cr. The ARC sale is a mix of one standard and NPA accounts written off. This does not have any impact on NPL movement.
  • Total recoveries and upgrades amount to 2804 cr.
  • During the quarter, slippages from the restructured book stand at 942 cr.
  • Total number of contingent provisions available=262 cr.


  • The quarterly NII has increased 4% yoy and 9% qoq with NIM which has improved by 40 basis points over the last quarter at 3.83% and domestic NIM at 4.11% .
  • For FY17, there has been a decrease of 23 basis pointsinNIM to 3.67%.
  • Bank expects the NIM margins to reduce in a short term basis but expects the trend to reverse in 2 years.
  • Trading income stands at 428 cr. which is up 350% yoy.
  • There has been an 18% increase in operating expenses yoy.
  • Fees income which constitutes 31% of operating revenue has increased 8%.
  • Retail fees has grown by 31% yoy and card fees has grown by 30% yoy
  • Corporate banking fees has declined by 11% yoy.
  • Operating profits standing at 4375 cr. have declined 1%.
  • Operating profit margin is at 3.01% when compared to 3.41% the previous year.

Capital Adequacy

Axis Bank Q4FY17 Capital Adequacy.png
  • Total capital adequacy is at 14.95% with tier1 capital adequacy ratio at 11.87%
  • The tier 1 ratio as of Q3FY17 was 12.99% and 12.51% as of 31st Mar. 2017.
  • 170 basis points of tier 1 is because of growth, 11 points due to new guidelines regarding capital, 68 basis points are due to additional capital and 48 basis points are due to profit.
  • Risk weighted assets for the bank stands at 472313 cr. and 17% yoy growth.

Subsidary Performance

  • The growth in average loans to 4358 cr. and 49% growth in PAT to 165 cr. in FY17.
  • The retail broking business has seen a 41% in active client base.
  • Axis Capital reported 113 cr. in PAT and Axis securities grew 44% to 52 cr.

Credit Cost

  • Credit cost guidance range is 175-225 basis points.
  • Assumptions surrounding the guidance are :-
  • o Improvement/deterioration in underlying operating environment.
  • o Resolution mechanism of large accounts that have been termed NPA.
  • o Credit growth impacts
  • Bank’s average credit cost is 94 basis points. At 280 basis points, bank is above the long term average.  Bank expects to return to long term averages in FY19.


Axis Bank Q4FY17 NPA Trend.png
  • Standard Asset provisioning was 187 cr. NPA provisioning was 1742 cr.
  • For SDRs, provision of 249 cr. is on investment.
  • NIM compression is already compressed in 20 basis points.
  • 4320 cr. was the slippage from the corporate book and 83% was from the watchlist.


South Indian Bank Q3FY17 Concall Summary

South Indian Bank Logo

Performance Overview

South Indian Bank Q3FY17 P&L
SIB Loan Book Composition Q3FY17
  • Total business grew by 15% mainly driven by deposits in CASA . Bank will deploy this carefully.
  • Deposits increased by 19% YOY. 
  • CASA has grown by 33% YOY. NRI deposits has grown 20% yoy.
  • Total advances increased by 11.41% yoy
  • Of the total advances, corporate loans are 39.8%, SME 23.4%, Retail 20.1%, Agri 13%, gold 2.9%.
  • NIM stands at 2.72% on standalone basis.
  • Overall growth of 15% yoy in retail portfolio excluding gold, 13% in agri, sme 17%, home loans including LAP 33%, auto 29%.
  • Cost to income ratio has come down by255 basis points QOQ to 48.5%
  • Other income
    • Other income stood at Rs. 259 Crore for the current quarter including profit on sale of investment of Rs. 127 Crore. Other contributions are from transaction income 45 Cr, tech income 22 Cr and forex 8 Cr
    • Increase in the other income: Treasury component includes 50 Crore from HTM profit booking. This could be one time as sale amount may not be available next quarter. IT refund and selling of priority sector loans constitute the rest of the other income
South Indian Bank Q3FY17 Other Income
  • Fee income has come down: It will come back and most probably increase from here due to increased card usage.
  • Tier 1 does not include 9M profit but includes the revaluation reserve
  • Growth in Agri and sme together is flat. there is growth in Home loans and LAP. Retail, except gold has shown growth
  • No major cases of Balance Transfer cases in the quarter
  • Gold Loan total portfolio 4154 Cr vs 3979 Cr YOY, and 4265 Cr as on Sep 2016
  • Employee provision on retirement benefit for the entire year has been done
South Indian Bank Key Ratios Q3FY17

Other Updates

  • Bank has received FIEO expert excellence award for 2014 -15 in the best financial institution category in southern region
  • The Bank has also received approval from RBI for opening an office in Dubai,  this will help in increasing theNRI base.
  • Recently introduced mobile based application. The application has also been chosen as winner in the financial innovation 2017 by banking frontiers.
  • Technology division has secured ISO certification during the quarter .
  • Adopting strategy for expanding retail business strengthening SME, enhancing asset quality and improving share of other income

Asset Quality

  • Continuously enhancing the asset quality is the main focus of the Bank . Restructured Book decreased by 42%  yoy mainly due to resolution of issues relating to power discom under UDAY scheme.
  • Gross NPA of the company stood at 3.98% Flat on qoq basis while net NPA at 2.52% vs 2.77% QOQ
  • Expect that Q4 would see intense activity in resolution of stress Loan book.
  • Capital adequacy ratio stood at 11.05%
  • Bank is staying away from large size corporate loans. But Corporate loans from 25 to 100 crore with adequate safety will continue to be focus area of the company
  • Tamil Nadu Government has joined UDAY Programme, so that will help upgrade some stressed accounts
  • During the quarter pre provisioning operating profit significantly increased by 43%.  YOY .  Provision for this quarter during the period increased by 64.51% mainly on account of stressed corporate portfolio.
  • In last Quarter, bank mentioned about one account of 1.2 Billion, which might get added in the SDR, Bank has added that account in Q3FY17
South Indian Bank NPA Movement Q3FY17
  • Breakup in reduction in NPA this Quarter:
  • Fresh NPA 196 Cr
  • Recovery 26 Cr
  • ARC Sale of 49 Cr
  • Write off of 41 Cr
  • Upgrades of 39 Cr
  • Total reduction in Gross NPA -155 Cr
  • Gross NPA position is 1,787 Cr
  • 6000 Crore of accounts have gone in SDR. All are above 100 Cr
  • The major NPA and Stressed assets are in this 6000 Crore and not in remaining loan book
  • Not considering Relaxation in NPA norms by RBI, NPA would be higher by 80 Crores(all in Retail Portfolio}
  • Agricultural slippages moving up
    • Slippages in agricultural loans usually occur when some relatively larger account become stressed,  This getting evened out
    • Drought in Kerala - The company does not expect slippage issues too much in agri. There is lower monsoon this year. In Tamilnadu monsoon was fine. In some of the regions, there might be some slippages,  but no significant impact

Update of Fraud Case

  • One account because of problems associated with borrower abroad. The exposure is secured by high quality building. But on a conservative basis, management has classified it as fraud
  • Amount of expected recovery: expect significant recovery. almost all is land and buildings. expect 25% haircut on the value on total exposure of roughly 193 Crore

Rights Issue

  • Bank will raise Fund through right issue. Ratio 1:3. Share price Rs 14 /sh
  • Tier 1 Capital after Rights Issue: The approx value of Right issue is 630 Crore and it is not included this in calculating the CAR
  • Final decision will be taken shortly

Branch expansion

  • The bank will have more branches in areas where existing branches are showing good growth

CASA strategy

  • Average ticket size in housing loans is 27 Lakhs. Yield stands low at 10%
  • Core Tier 1 Capital Ratio is 9.39
  • 39% is total corporate book (anything above 25 Crore)

Effect of Demonetization

  • From, sub 20%, bank has moved up to 22-23% of deposit as a percentage CASA. Due to Demonetization, it has reached at 26%. Bank believes that this deposit will remain or get converted into FD
  • Also, recovery got affected in this Quarter due to managing other aspects relating to demonetization
  • Average daily online transactions doubled post demonetiization
  • Disbursements got affected yoy during demonetization: it affected in this Q3FY17. The disbursements are now back on track. Bank is fully loaded with proposal sanctions
  • Gold Loan Portfolio has gone down: The overall trend is positive and due to demonetization, it was affected in this Quarter . In the last few days, there is a pickup.
  • Borrowers paying by old notes: Recoveries are just the same. Bank is not finding any increase in recoveries
  • Except in the cases of small retail accounts, demonetization hasn't contributed to NPA.

Employee expenses

  • Employee Expenses will be roughly be same in the Q4
  • Employee count will increase in future. Also there will be 10-12% Provision to be provided for wage hike

Outlook on PCR Level

  • PCR Level is now at 50.17%. The company is to reach 70% at the earliest
  • 70% PCR is expected by 2020 with lower corporate portfolio and higher retail portfolio
  • Home loans and LAP growth rate is around 30% for target

NRI Business

  • NRE FD - Rs 2888 Cr vs 2582 in Q2 FY 16
  • NRO Rs 482 Cr VS Rs 432 Cr in Q2 FY 16
  • FCNR Rs 1288 C vs Rs 1234 Cr in Q2 FY 16
  • NRI normal deposit is 11191 vs 10777 in Q2 FY 16
  • NRO time deposit is 469 vs 451 in Q2 FY 16
  • Peak rate is 7.15% on these deposits

 Corporate and wholesale banking segmental profitability

  • Corporate book continues to be loss making due to elevated provision
  • Profitability for this Quarter is higher due to relatively higher other income which may not be there in the subsequent Quarters, but elevated provisions will be there

 Impact of high MCLR cuts by large Banks

  • Growth @ 15% is doable given because of the relatively limited portfolio. And with CASA improving, there will be postive effect on NIM and itwill compensate for the cuts
  • Total SOR Book is 1170 Cr.
  • This Quarter, there was interest reversal of 38 Cr based on guidance by RBI on SOR books. so Cumulative NIM got impacted by 8 Bps


  • Management expects a Growth rate of 15-17 % in 2017-18
  • Total stressed book is only going to decrease fromhere
  • NIM Guidance2.75% now, targeting 2.75-2.80%
  • Credit Cost may continue almost at the same level now
  • The bank is focusing on retail so more employees are needed. Going forward, there will be more hiring


IndusInd Q3FY17 Concall Summary

Indusind logo

Performance Highlights

IndusInd Q3FY17 P&L
  • 29% increase in Revenue, operating profit and Profit after Tax
  • 35% increase in net Interest Income
  • Increase in net interest income is not just because of Increase in liquidity as even in 9 months the net interest income grew by 35%
  • Core fee income grew by 22%
  • Deposit grew by 38%. Deposit growth looks to be lower than past quarter because of moving out of Rs 8,000 Cr IPO money
  • Current Account grew by 46%.
  • Biggest challenge in this quarter was balance sheet management
  • Balance sheet management is not about only the deployment of funds but also about movement of cash out of the vault to currency chest so as to recognise cash reserve ratio
  • Growth in credit and debit card spends and also huge increase in mobile transaction.
  • Foreign exchange income gone up slightly on QoQ basis. Year on year it is 5% but In Q3 itis15 percent
  • New accounts added in this Q3FY17 is 280000. Average ticket size is Rs. 45,000
  • Total credit card and debit card swipe transactions increases by 2.5 times and 3.5 times in November, 2016 respectively
  • Bank has sold 850 Cr of advances in this qtr, and it has not bought any

Key Financial Indicators

IndusInd Key financial indicators Q3FY17
  • CRAR remains at 15.31 vs 15.32 QOQ. Tier 1 is 14.72
  • Cost to Income ratio moved up by only 20 bps at 47.47% vs 47.28% in Q3FY16
  • Net interest margin improved to 4% in Q3 FY17 vs 3.91% in Q3 FY16
  • RoA declined to 1.88% in Q3 FY17 vs 1.92% in Q3 FY16 and 1.93% in Q2 FY16
  • RoE improved to 15.72%  vs 14.05% in Q3 FY16 and 15.38% in Q2 FY17

Effect of Demonetization

  • Initially there was huge liquidity increase in banks and then RBI imposed CRR, so there was a crunch on liquidity. Then RBI relaxed CRR, so there was again increase in liquidity. This affects the interest income.
  • Demonetization effect on retail  book
  • Significant impact on CASA book which has moved up to 37% last qtr it was 36.4
  • Last Quarter, due toIPOs, huge amountwent out. Despite this, CASA has  grown.
  • Growth in CASA is 50 % normal and 50% due to    demonetization
  •  Customer acquisition around 133000 accounts in December which is almost double thenormal addition
  • Longer theme of Banks due to demonetization effects:
    • In the long term, Bank may play in a segment where cash used to dominate operations
    • 20% of two wheeler are actually financed rest are given in cash
    • Banks have big opportunities due to this cash diminishing or vanishing
    • Increase in deposit flow in segment like insurance or real estate
    • Management thinks that even if just 10% of demonetization flow goes in mutual fund, it would lead to a big great opportunity to the Bank as a  distributor
    • Mortgage business would become more attractive because of low house prices, low rates and interest subsidy announced by PM.

Loan book

  • Corporate loan book is growing 25%.
  • Vehicle finance group grew by  21%
  • Non vehicle retail group grew by 42%.
  • Major part of banks loan book is fixed in nature. As rates fall bank will benefit.
  • Benefit is in the interest income side of the book
  • The loan book configuration is showing improvement in retail part. Thereis1 percent shift in favour the retail part which is a beneficial shift. Target is tomove isto 50 50 over next 3 yrs

Outlook on Loan against Property Book

  • No adverse effect in the portfolio of Loan against Property due to demonetization effect
  • In November, there was a dip in the LAP bookings. It was more internal
  • In December, it is back on track
  • There is no major blip on the delinquency front

Retail Business

  •  Vehicle business had drop in enquiries in November, but it picked up in 10-15 days. Total business in October was 2100 Cr, 2100 Cr in Nov. and 1800 In Dec. Total for the Quarter was 6000 Crore.
  • Vehicle Finance retail grew by 21% in this qtr and bank has gained market share in vehicle financing in segments like Tractors, commercial vehicle, cars and three wheeler only on two wheeler areas market share has been quite lost.
  • Non Vehicle - Slowdown in LAP book in November, butitwas back in December
  • In home loans, company is a distributor, it saw a dip in demand in November and for  December, it saw 70% of the normal business
  • Credit Card and personal loans are showing good demand
  • Business Loans business slows down
  • No slowdown in gold loans
  • Retail client base is 4 million and it is growing in different products
  • Increasing tie up around the world and finance is growing pretty good

Asset Quality

IndusInd NPA Movement Q3FY17
  • Slippages are constant for the Quarter.
  • ARC book has shrunk which means recovery is more than sales and the book is down to 223 crores and net recovery is of 14 Cr during the Quarter.
  • The Retructured book is at 41 bps and two accounts slipped from re- structured book into NPA book, but are smaller accounts.
  • Vehicle finance book has shown improvement in GNPA figures. Cars loan book GNPA has moved up by an absolute figure of Rs 13 Cr
  • There is an Improvement in Risk Weight age (RWA) Profile. Percentage of RWA to the total asset has fallen below 79%. It was 82-83% earlier. This means that the quality of the book has improved.
  • Total movement in terms of loan book on which RBI dispensation was sought is about Rs 52 Cr
  • Outstanding Security receipt book at the end of 31st December is 223 Crore.
IndusInd NPA COnsumr Finance Q3FY17

Term Deposits

  • Composition of term deposit share is 37% of CASA
  • Approx 25% is retail deposit and rest is wholesale. In Q3Fy17, there is reduction of 24-25 bps in deposit  cost.
  • Bulk deposit is similar to money market. The easiest way to figure out is to look at the CB rate market

Branch Network

  • Branch network now at 1075 branches. By Q4, it should reach 1200 branches.
  • 1700 new branches 339 new ATM and added 3500 employees during the year to support the growth of all business units

Bond Business

  •  Infra bond of 1500 crores added to borrowing and regrouping for the purpose of last qtr where repo borrowing has been netted now been grossed up which results in borrowing and investment going up by Rs 4000 Cr compared with Q2FY17
  • Bond books will do well with lower rates but in next 12 months there could be seen some issue on re-investment risk in the books of Banks.
  • Refinancing opportunity will increase and some of the Bonds may convert into banks loan book because of pricing
  • All Investment banking income is related to debt market either structured or distribution

Insurance and MF bussines

  • Insurance and mutual fund products industryhas seen a big expansion  .
  • Growth rate for the insurance sector and investments product will increase In March Quarter

Fee Income

  • Fee Income of the company is diversified and some of them is builtin by solid annuity plans. Fee income from investment banking is stabilized.
  • Loan processing fee is dependent on both new loans and renewals.
  • Retention rate in CA are higher than SA rates

Microfinance Business

  • Microfinance business is back to normal.
  • Microfinance is 2.5 % ofthetotal loan book. 3000 crores total portfolio out of which  2600 Crin loan book and a small amount in investment book
  • Cumulative collection efficiency ofthe micro finance portfolio is approx. 99%   plus
  • 3 yr loan book target is 10,000 Cr