Analyst Concall
IndusInd Bank aims microfinance book at 8-10% of total book
This story was originally published at 21:14 IST on 31 January 2025
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--IndusInd Bank: Aim to bring down MFI book to 8-10% of total loan book
--CONTEXT: Comments by IndusInd Bank mgmt in post-earnings analyst call
MUMBAI – IndusInd Bank plans to bring down its microfinance book to 8-10% of the total book, Sumant Kathpalia, managing director and chief executive officer of the bank, said in the post-earnings analyst call.
"Over the past three years, we've been continuously reducing the share of the MFI (microfinance). It was 15%, then 11%, 12%, and now we want to bring it down to 8% to 10%. I think that is the optimal size of the MFI book, I think that's our first step, that 8-10% is what our share of the MFI book should be. And that's what we are working on," he said. Microfinance loan book increased 9% on year in Oct-Dec to INR 325.64 billion, it was almost flat sequentially.
He also said that the bank is launching a segment called the Bharat Vikas Banking in April. Merchant acquiring business, Bharat Financial business and small SME lending products will be launched into this vertical.
The bank's management also said that they will scale up their retail assets at a faster pace with a focus on improving diversification of the overall loan book and increasing the focus on the retail secured mix with home loans and MSMEs.
The bank's net profit fell 39% on year in Oct-Dec due to a surge in provisions. The private sector lender's provisions in the reporting quarter almost doubled from a year ago, rising 86.6% on year to INR 17.44 billion. Sequentially, however, these were down 4.2%. On the utilisation of the contingency buffers, the bank said that INR 1.60 billion was towards microfinance and INR 400 million was towards corporate accounts. The bank held a contingency provision of INR 13.25 billion as on Dec. 31.
On margin guidance for the rest of the financial year, Kathpalia said, "I would like to see quarter 4 (Jan-Mar) playing out." For the reporting quarter, the net interest margin saw a decline of 36 basis points on a yearly basis to 3.93%. Sequentially, the margin was down 15 bps.
On Friday, shares of the bank closed 3.6% higher at INR 992.15 on the National Stock Exchange. Results were announced post market hours. End
Reported by Kshipra Petkar
Edited by Deepshikha Bhardwaj
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