IndusInd 3.0 Reinforcing Sustainability Presentation at Morgan - PowerPoint PPT Presentation

IndusInd 3.0 – Reinforcing Sustainability Presentation at Morgan Stanley Investor Conference June 10, 2020 1

Economy Opening up Gradually – Rural to be Faster than Urban  Ultra high frequency indicators such as power demand, E-Way bills, fuel consumption etc. showing visible signs of recovery from May 2020  However, the economy is expected to show first contraction in 40 years, borne heavily by services compared to manufacturing  Rural areas so far remain less affected vs. Urban India, as almost 55% of the positive cases are from 10 urban districts including metro cities.  Prospects of rural economy also look good on another year of expected normal monsoon coupled with Government’s thrust on improving rural incomes  Government and the RBI have announced a slew of measures to ease liquidity, asset classification, rate cuts and more may follow.  Banking industry has risen to the occasion with continuity of services despite challenging conditions 2

IBL 3.0 – Reinforcing Sustainability Across the Bank 1. Strengthening Funding Profile 2. Building on 4. Adopting to Livelihood Loans Banking & Sharpening Post-Covid-19 Corporate RoRWA 3. Maintaining Strong Loss Absorption Buffers 3

Retail Deposit Acquisition Ramped-up Despite the Lockdown 1  Digital acquisition scaled up backed by targeted digital marketing and Video KYC launch  Physical acquisition returning to normalcy with relaxation in lockdown  Scaling up deposit partnerships with fin-tech players to further augment acquisitions  Concentration of Top 20 Depositors reduced from 23% in March 2020 to 20% in May 2020 Retail Fixed Deposit Acquisition (#) Retail CASA Deposit Acquisition (#) Share of Non Callable & LCR Retail Deposits (Indexed) (Indexed) Non Callable TDs Retail as per LCR # of FDs Booked Regular Sourcing Digital Sourcing 373 365 66% 196 59% 172 55% 52% 32% 28% 118 31% 25% 100 100 97 82 69 112 100 89 37 34% 31% 27% 24% 13 Mar'19 Sep'19 Mar'20 May'20 Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jan'20 Feb'20 Mar'20 Apr'20 May'20 4

1 Durable Borrowings to Complement Deposits Borrowing Mix (May 2020)  Borrowings book provides stable & durable liquidity Long-Term FCY Money Market * Borrowings 11%  15% Priority sector loan portfolios such as Microfinance, Vehicle Finance and MSME generate refinance from Short-Term Inter- Euro Medium-Term Bank Notes domestic and international developmental institutions 12% 5% with average tenure >2 years  ADFC Deposits Infrastructure FCY borrowings are deployed for FCY loans or fully from Indian Banks Bonds hedged and converted into INR liquidity 4% 3% AT1 Bonds  Short term market borrowings at 10%-12% only 6%  Share of borrowings to remain range-bound going Refinance from Development forward Institutions 44% * Largely against liquid collaterals LCR increased from 112% in Mar-2020 to 123% for May-2020 5

“Livelihood Loans” to Remain a Mainstay of the Bank 2 x Loan Mix (March 2020) Small Corporate 2%  Vehicle Expertise in Vehicle and Micro Finance is our key strength Finance 28%  Belief in strong risk adjusted returns across the cycle Mid Corporate 19%  Historical and early delinquency performance better than the industry Large Important facet of our “Social” contribution with financing  Corporate livelihoods for over 10mn families 23% Microfinance 12% Other Retail 16% 6

2 x Sharper Focus on Wholesale RORWA  Well-run business for a decade, however, certain learnings from Top 20 Advances (%) the recent past 15%  Focus on building granularity and sustainability across cycles 15%  Independent Portfolio Monitoring Unit reporting to the MD & CEO 10%  Delinquency experience from BBB book and off balance sheet has historically been in line with overall Corporate book  Faster recognition and provisioning for stressed assets Mar'18 Mar'19 Mar'20 7

3 x Maintaining Strong Loss Absorption Capability  Operating Profit Margin provides ability to absorb significant stress vs. historical run-rates  Focus on cost initiatives to counter revenue headwinds due to Covid-19  Ambition to maintain elevated levels of capital adequacy at all times PBT / Loans Total Provisions / Loans PPOP / Loans CRAR 10.0% 18.0% 15.5% 15.3% 9.0% 15.0% 15.0% 16.0% 14.2% 8.0% 14.0% 12.1% 7.0% 12.0% 6.0% 5.2% 10.0% 4.8% 4.7% 4.6% 4.5% 5.0% 4.3% 8.0% 4.0% 3.0% 6.0% 3.0% 2.7% 3.9% 3.9% 3.8% 3.9% 4.0% 2.0% 2.2% 2.0% 1.0% 1.7% 1.0% 0.8% 0.8% 0.6% 0.0% 0.0% FY15 FY16 FY17 FY18 FY19 FY20 8

3 x Building Covid-19 Buffers  Creating provisions ahead of the NPA formation  Raised PCR from 53% to 63% in Q4FY20  Calibrating our approach from Moratorium 1.0 to Moratorium 2.0  Early signs of rural economy opening up evident from microfinance operations MFI Centre Meetings Number of Customers Met (Lac) 88% 84% 8.9 75% 64% 7.3 62% 6.3 50% 42% 4.8 4.3 3.7 3.1 25% 16% 1.7 1.3 0.3 3% 04-May 05-May 06-May 07-May 08-May 09-May 10-May 11-May 12-May 13-May 14-May 15-May 16-May 17-May 18-May 19-May 20-May 21-May 22-May 23-May 24-May 25-May 26-May 27-May 28-May 29-May 30-May 31-May 01-Jun 02-Jun 03-Jun 04-Jun 05-Jun 04-May 05-May 06-May 07-May 08-May 09-May 10-May 11-May 12-May 13-May 14-May 15-May 16-May 17-May 18-May 19-May 20-May 21-May 22-May 23-May 24-May 25-May 26-May 27-May 28-May 29-May 30-May 31-May 01-Jun 02-Jun 03-Jun 04-Jun 05-Jun 9

Adopting to “Banking Post Covid - 19” 4 x  Accelerating Digital Journey  Re-engineering process to facilitate digital banking  Building market places & partnership with fin-tech ecosystem  Improving Employee Efficiency  Flexibility of Work-from-Home as a continued option  Continued vigilance on health and safety  Reassessing Operating Expenses  Investment in digital workplaces  Revisiting cost structures for travel & conveyance, branch layouts etc.  Tightening Underwriting Approach  Building Covid-19 as a constant risk for the foreseeable future  Identify segments most vulnerable to primary and secondary effects of outbreak  Rigorous Monitoring  Safeguarding systems against cyber security risks and frauds 10

Thank You 11