Debt Investor Presentation March 11, 2019
India – Positive Macro Outlook Credit growth continues to be strong GDP growth to remain in the 7.0%-7.5% range this year and the next 20.0% 8.2% 7.6% 7.2% 7.4% 7.1% 6.6% 6.8% 6.7% 15.0% 5.6% 5.6% 6.1% 14.28% 10.0% 5.0% 0.0% Currency regained stability in the new year CPI hovering at the lower end of prescribed limits 12.0% 75.0 INR/USD 73.0 70.97 10.0% 71.0 8.0% 69.0 6.0% 67.0 65.0 4.0% 2.05% 63.0 2.0% 61.0 0.0% 59.0 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 57.0 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 2 Source: CSO, RBI, Research
IndusInd Bank – Consistently Building Scale with Profitability Strength Growth Returns CRAR at 14.19%; CET1 at 12.79% 3 Year CAGR 9MFY19 (y-o-y) 9MFY19 Strong Asset Quality with impaired assets Loans 28% 35% RoA = 1.7% proportion amongst the lowest in Indian Deposits 27% 20% banks; Net NPAs at 0.59% RoE = 15.9% Revenue 27% 18% In top decile on productivity, profitability Profits 26% 11% NIMs = 3.85% and efficiency parameters in Indian banking industry Networth 31% 15% Net Profit (Rsmn) Total Assets(Rsbn) Revenue (Rsmn) 36,059 1,22,476 2,562 1,07,020 1,02,341 2,216 29,410 28,679 1,787 78,135 22,865 1,429 58,241 17,937 1,091 47,812 870 14,080 FY14 FY15 FY16 FY17 FY18 9M FY19 FY14 FY15 FY16 FY17 FY18 9M FY19 FY14 FY15 FY16 FY17 FY18 9M FY19 [Not annualized] [Not annualized] 3 Note: Data as of December 2018
Overview of the Bank Leading private sector bank and financial services company in India Shareholding (1) Incorporated in January, 1994; Current customer base of ~14 million (1) and Total NRIs/ Director/ Others, Assets of over Rs 2,500 bn (1) 2.69% GDR issue, 10.74% Promoters, 14.99% Pan India presence through a network of 1,558 branches and 2,453 ATMs (1) Individuals, 6.46% Diversified loan book – Split between Corporate & Commercial Banking and MFs / Banks/ Insurance Consumer Finance at 61% and 39% respectively (1) Co, 8.95% Private Corporates, 8.28% Enterprise-wide Risk Management framework for effective management of risks Market Cap of over Rs 915bn (2) implying trailing P/E multiple of 26x and P/B multiple of 3.6x *FIIs, 47.89% Received regulatory & shareholder approvals for the Bharat Financial Inclusion Ltd. (BFIL) Merger, pending for the NCLT approval *includes FPIs 1. As on December 31, 2018 4 2. As on March 8, 2019
Organization Structure Global Markets Transaction Banking Product Groups Business Units Client Groups Consumer Banking Corporate Banking Vehicle Finance Corporate & Investment Banking Retail Liabilities Banking Channel Management Commercial Banking & Services Business Banking Financial Institutions Group Wealth Management & Third Party Distribution Public Sector Unit Retail Assets 5
Benchmarking Revenue, Risk & Returns A comparison of IBL with the top 6 Public Sector (PSU) and top 5 Private Sector Banks (PB) 40% * Bubble size indicates Profit After Tax Revenue Growth PB3 30% PB5 IBL 20% PSB7 PB4 PSB2 10% PSB3 PSB1 PB1 PB2 0% PSB6 -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% PSB5 ROA -10% PSB4 -20% Data as of FY18. (Banks’ nomenclature not in any particular order) 6 PSB PAT are all negative
Domestic Ratings CRISIL (1) AA + for Infra Bonds program CRISIL AA for Additional Tier I Bonds program ICRA AA+ for Additional Tier I Bonds program CRISIL A1+ for certificate of deposit program IND AA+ for Senior bonds program by India Ratings and Research (2) IND AA for Additional Tier I Bonds program by India Ratings and Research IND A1+ for Short Term Debt Instruments by India Ratings and Research 1. Indian subsidiary of S&P 7 2. Indian subsidiary of Fitch
Award Winning Brand / Franchise Ranked 20 th Most Valuable International Banker Dream Employer of the Year 2018 Awards Brand Best Commercial Bank of the Year, India BrandZ Top 75 WPP Pls & Milward Brown ET NOW: ‘Dream Companies to Best Innovation in 2018 Work for 2019” Retail Banking India 8
Presentation Path Capital Adequacy 1 Asset Quality 2 Management Track Record & Strategy 3 4 Earnings Update Liquidity & Funding Profile 5 Building Sustainable Banking 6 9
1. Strong Capital Adequacy Bank has maintained strong capital adequacy levels well in Rs bn FY17 FY18 9MFY19 excess of the minimum regulatory requirement Credit Risk, CVA and UFCE 1,220 1,445 1,750 Market Risk 67 98 80 The proposed merger with BFIL to be capital accretive Operational Risk 148 188 188 The Bank is valued at 3.6x of Dec-2018 book value (1) Total Risk Weighted Assets 1,435 1,731 2019 The Bank’s policy of dividend payout ratio is between 14% and 17% of the Net Profit earned during the year. CET 1 Capital Funds 201 232 258 Additional Tier 1 Capital Funds 10 20 20 CRAR Tier 2 Capital Funds 8 8 8 Tier I Tier II CRAR 219 260 286 15.9% Total Capital Funds 15.5% 15.4% 15.3% 15.03% 14.19% 13.9% 13.9% 0.6% 0.6% 0.45% 1.6% 3.6% 0.41% 12.1% 1.1% 2.5% 0.9% CRAR 15.31% 15.03% 14.19% CET1 14.02% 13.42% 12.79% 14.9% 14.7% 14.58% 13.78% 13.8% 12.7% 12.3% 11.4% 11.2% Tier 1 14.92% 14.58% 13.78% Tier 2 0.59% 0.45% 0.41% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 9M FY19 10 (1) Market Cap as on March 8, 2019
1. Deploying Capital Efficiently Leverage Ratio Return on Risk Weighted Assets (RoRWA) 2.40% 2.34%* 9.56% 2.30% 9.48% 2.28% 9.42% 2.23% 2.21% 9.02% 9.02% 8.72% 8.66% 2.04% Required 4.5% FY15 FY16 FY17 FY18 9MFY19 FY20 Ambition Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 *Excluding contingent provision 11
2. Asset Quality Stable Across Cycles Credit Cost * NPA 1.23% 0.79% 1.17% 1.13% 1.12% 1.03% 1.01% 0.98% 0.61% 0.93% 0.59% 0.59% 0.87% 0.81% 0.53% 0.48% 0.46% 0.41% 0.41% 0.40% 0.59% 0.51% 0.50% 0.39% 0.36% 0.33% 0.31% 0.31% 0.28% 0.27% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 9M FY19 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 9M FY19 Gross NPAs Net NPAs [Not annualized] * Net of recoveries 12
2. Diversified Loan Book Loan Book (Rs crs) 1,73,169 1,73,169 1,63,144 1,44,954 1,13,081 55% 61% 88,419 61% 60% 68,788 60% 59% 59% 45% 39% 39% 40% 40% 41% 41% FY15 FY16 FY17 FY18 Sep-18 Dec-18 Dec-18 (BBG forming part of Consumer) Consumer Finance Division Corporate & Commercial Banking (Rs crs) Corporate Small (Rs crs) Dec-18 Corporates Banking Consumer Finance Dec-18 7% Large BBG 50,833 29% Comm. Vehicle Loans 23,304 13% 6% Corporates Utility Vehicle Utility Vehicle Loans 3,383 2% Mid size Comm. 32,312 19% Loans Mid Size Small CV 3,034 2% Corporates Vehicle 2% Corporates Loans Small Two Wheeler Loans 4,322 2% Small CV 21,991 13% 19% 13% Two Corporates* 2% Car Loans 6,285 4% Wheeler Total Advances 1,05,136 61% Loans Tractor 3,315 2% Car Loans 2% Equipment Financing 6,852 4% 4% Large *Includes Business Banking Corporates Credit Card 3,546 2% Tractor Rs. 10,511 crs managed by 29% 2% Loan Against Property 8,557 5% Consumer Banking Equipment Credit Card BL, PL, GL, Others 5,435 3% Financing 2% Total Advances 68,033 39% 4% Loan Against BL,PL,GL Property 13 3% 5%
2. Diversified Corporate Portfolio NBFCs (other than HFCs ) Microfinance Gems and Jewellery Power Generation Real Estate Constn related to infra.- EPC Steel Lease Rental Roads/other infra projects Services Petroleum & Products Food Beverages and Food processing Other Industry 14
2. Well Rated Corporate Portfolio 24% P 22% E R C 20% Investment Grade Sub Investment Grade E N 18% T O 16% F R Unsecured Non Fund Based % 14% A Secured Non Fund Based % T 12% E Unsecured Fund Based % D Secured Fund Based % P 10% O R 8% T F 6% O L 4% I O 2% 0% IB1 (AAA) IB2+ IB2 (AA) IB2- (AA-) IB3+ (A+) IB3 (A) IB3- (A-) IB4+ IB4 (BBB) IB4- IB5+ IB5 (BB) IB5- (BB-) IB6 (B) IB7 (C ) IB8 (C ) NPA (D) (AA+) (BBB+) (BBB-) (BB+) 15
2. Behavioural Scoring affirms quality of Vehicle Financing Portfolio • Behavioural Score (B- score) measures post disbursement credit quality using long range historical data. • B-score assesses every borrower risk using Current and Historical DPD, LTV, Geography, Loan tenor, Customer type, etc. • B-score is used for credit / portfolio quality assessment, improving collection efficiency, cross-sell and is a lead indicator of credit cost. Q-o-Q Movement in Weighted Average Risk Score (WARS): Quarter Mar'17 Jun'17 Sep'17 Dec'17 Mar'18 Jun’18 Sep’18 Dec’18 WARS 1.82 1.89 1.89 1.84 1.73 1.77 1.80 1.82 16
3. Planning Cycle 4 Strategy (FY17-FY20) Market Share with Profitability Loan Growth 25% - 30% Do More of the Same Strategy 40% CASA Ratio Digitize to Differentiate, Diversify and Create Domain Leadership Exceed Balance Sheet Resulting in Revenue Growth Growth Financing Livelihoods RoRWA > 2.4% Broad Themes Finding Customers from Within Branch Network 2,000 Reengineering Our Businesses Customer Base Double to >20mn Sustainable Banking 17
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