IndusInd Bank Earnings Call for Q4FY26 & Full Year

🎥 Apr 22, 2026 📺 trendlyne ⏱ 55m 👁 349 views

Conference Call with IndusInd Bank Management and Analysts on Q4FY26 & Full Year Earnings Performance and Outlook. Get the Earnings/Conference Calls podcast: https://trendlyne.com/feeds/earning-c... To download the Trendlyne app: https://play.google.com/store/apps/de... All earnings transcripts: https://trendlyne.com/earnings-transc...

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About Rajiv Anand

Rajiv Anand, Managing Director and CEO of IndusInd Bank, described the first quarter of fiscal year 2027 as a "clear inflection point" for the bank, stating that it has "substantially completed the balance sheet and earnings calibration" undertaken over the past year. In media appearances following the bank's Q1 results, Anand said the bank is now focused on accelerating sustainable growth, noting that he expects the bank to "start to grow in line with market" this year and that the exit position at the end of 2027 will position the bank to "dominate in our focus areas from 28 onwards." He attributed Q1 growth to the corporate side, stating that while corporate loan growth may be net interest margin-dilutive, it is positive from an operating expense and credit cost perspective. Anand also said the bank's board passed an enabling resolution to raise both debt and equity, but emphasized that the bank's capital position remains strong with a total capital adequacy ratio in excess of 17% and a Common Equity Tier 1 ratio above 16%, and that there are no immediate plans to raise capital. When asked about a decline in the bank's stock price following the earnings announcement, Anand stated, "That's not a question for me to answer. What I have control on is how I manage my business. I leave it to the markets on how they want to react on a day-to-day basis." He also addressed expectations for net interest margins, saying he wanted to "put to rest that the FCNR(B) money is not that cheap" and acknowledged there could be some margin pressure in the second quarter due to incoming liquidity, but expressed confidence that the bank has "enough engines of high yielding growth" to protect margins over the remaining three quarters.

Source: AI-verified profile updated from Rajiv Anand's recent appearances. Browse all interviews →

Transcript (15 segments)

Operator0:00

And welcome to IndusInd Bank Limited Q4 FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. And I'll hand the conference over to Mr. Rajiv Anand, managing director and CEO of IndusInd Bank. Thank you, and over to Mr. Anand.

Rajiv Anand0:32

Thank you. Good evening, and thank you for joining us today. I'll start with a quick view on the macro environment and then go into bank-specific developments. High-frequency indicators suggest economic momentum remains healthy through February. That said, heightened uncertainty from the ongoing conflict in West Asia has tempered the near-term outlook. Overall, India's macroeconomic fundamentals are considerably stronger than during previous crisis episodes and compare favorably with global peers, providing greater resilience against external shocks. Against this backdrop, our focus this quarter was firmly on balance sheet resilience and asset quality repair. We remained focused on growing core retail segments while optimizing the bulk portfolio. Retail deposit mobilization saw net addition of 6,800 crores, with all incremental deposits being retail in nature. The share of average retail deposits improved to 47.9% from 47.5% Q-on-Q. On the asset side, we maintained a selective approach with growth in vehicle finance, SME, and other retail segments. We're gradually scaling microloan disbursements. The wholesale loan book declined 2% Q-on-Q as we prioritize risk-adjusted returns. Net slippages were down 37% Q-on-Q. Annualized slippages were 1.71% versus 2.65% Q-on-Q. The overall stress book continues to moderate, giving us confidence that credit costs are past their peak subject to macro stability and seasonality. Pre-provision operating profit at 2,295 crores remained steady Q-on-Q. Provisions at 1,482 crores were down 29%, driven by lower net slippages. Profit after tax was 595 crores versus 128 crores Q-on-Q. Capital adequacy remains healthy with CET1 at 16.2% and CRAR at 17.48%. Our leadership transition is largely completed. The board approved appointments of Jagdish Mallareddy and Ganesh Sankaran as whole-time executive directors designate, and Nilesh Vikamsey and Ravi Garikipati as independent directors. In vehicle finance, the loan book stood at 99,876 crores, growing 2% Q-on-Q. Annualized gross and net slippages were 1.94% and 1% respectively, the lowest in several quarters. In microloans, asset quality saw significant improvement. Gross slippages reduced to 504 crores versus 1,022 crores Q-on-Q. Disbursements were at 5,400 crores, up 52% Q-on-Q. FY27 will be a year of calibrated growth rather than book contraction. Our home loan book at 6,510 crores grew 45% Y-o-Y. Gold loan disbursements grew 3x in six months, crossing 1,000 crores. We remain deliberately cautious on unsecured segments. SME loan book at 44,347 crores grew 1% Q-on-Q. We don't see material impact from the ongoing conflict on asset quality. Wholesale banking saw further refinement toward a more granular, balanced, and risk-calibrated franchise. We saw sequential recovery in deposits, reversing declining trends. Retail deposit accretion was supported by robust new-to-bank CASA acquisition. Cost of deposits at 6.07%. Average LCR at 118%. We believe AI, particularly GenAI, represents a structural shift for banking. At IndusInd, AI is a core strategic priority. We're investing in a dedicated AI center of excellence with 10 high-impact use cases across sales productivity, conversational banking, credit underwriting, and collections. Over 9,000 employees have completed AI training. I will now hand over to Viral to take you through the financial performance.

Viral15:53

Thanks, Rajiv, and good evening everyone. My commentary will focus primarily on sequential trends. I'll begin with the balance sheet and then talk about the P&L. Average advances dropped 2% sequentially from Q3, driven mainly by decline in wholesale banking advances and the micro loan book. Average deposits inched up 1%, supported by healthy retail deposit mobilization. Average CD ratio was at 82% versus 84.4% quarter on quarter. Net interest income for Q4 stood at 4,371 crores. NIM was at 3.39% compared to the normalized NIM of 3.35% quarter on quarter, driven by reduction in cost of funds. Non-interest income at 1,714 crores remained broadly stable. Operating expenses of 3,790 crores were stable quarter on quarter, adjusted for the one-off impact in the previous quarter. Operating profit at 2,295 crores remained steady quarter on quarter despite the lower loan book. PPOP to average loans ratio was at 2.93% versus 2.84%. Provisions were at 1,482 crores, down 29% quarter on quarter, driven by lower net slippages. Write-offs amounted to 1,868 crores. GNPA and NNPA were at 3.43% and 1% respectively, with PCR around 71%. Net security receipts declined to eight basis points and restructured advances to six basis points quarter on quarter. PAT was 594 crores versus 128 crores quarter on quarter. CET1 at 16.2%, CRAR at 17.48%, and LCR at 118%. With that, let me hand over back to Rajiv for his closing comments.

Rajiv Anand19:20

Thank you, Viral. To summarize, our performance this quarter reflects the progress we have made in strengthening the granularity of balance sheet, improving asset quality, and driving more stable retail net growth. With strong leadership, comfortable liquidity, and capital adequacy, we believe the bank is well-positioned to deliver sustainable value over the medium to long term. While near-term growth remains calibrated, the trends on asset quality, retail deposits, and operating leverage give us confidence in progressively improving returns over the medium term. We are now open for Q&A.

Operator20:02

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their desk phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Everyone is requested to kindly limit the questions to a maximum of two per person. We will wait for a moment while the question queue assembles. The first question is from the line of Rikin Shah from IIFL Capital. Please go ahead.

Rikin Shah20:42

Hi, good evening and thanks for the opportunity. I had three questions. The first one is there was a reduction in the banking outlet footprint by about 230 sequentially—what's happening there? And while Rajiv, you did mention that we should think about growth picking up versus contraction in past quarters, overall for FY27, what kind of loan growth should one expect? The second question is if you could share the absolute quantum of AFS reserves as of March 26 and clarify if there was any impact from RBI's FX NOP rule, and if so, was it reflected in the Q4 results already? The final question is on asset quality. The slippages have come down, but we clearly had more room to bring down the net NPL ratio further. Instead, we've seen provision coverage marginally decline sequentially. When do you expect to reach the earlier guidance of 50 basis points net NPL ratio? Will it be more gradual, or can accelerated write-offs get us there sooner?

Rajiv Anand21:52

So let me take the first—let me see if I can remember the questions. First is on business correspondent, those 200-odd outlets. It's just a function of optimizing, rationalizing some of these centers. As a result, we have basically reduced 200 of those locations because they had become unviable as per the work we have done.

Viral22:27

Credit growth.

Rajiv Anand22:27

Yeah, credit growth. The second question was around growth. What I've been talking about over the last couple of quarters is that FY27 should see us grow broadly in line with market, and that's what we are working towards. The foundations are now in place for us to be able to do that. For the other couple of questions, I'd like to request Viral to cover them.

Viral22:55

I can cover the other two. The AFS reserve was negative 50 crores. We want to highlight that our AFS book is not that large—it's quite small in the context of the overall investments portfolio. On net NPA, you're seeing a sequential decline from 3,300 to 3,169 crores. More than 50% of that is from the vehicles business, and less than 25% is now from microfinance. The vehicles portfolio—you will not see much credit loss from that net NPA. It's important to understand the constituents. It would be a gradual reduction; we want to be consistent on our write-off policies. On the FX NOP impact, it hasn't impacted us too much. We've seen FX volatility impacting other assets. The RBI requirements impact was not material—it was in tens of crores.

Operator24:37

Thank you very much. We can now request you to come back for a follow-up question. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.

Kunal Shah24:47

Thanks for taking the question. Post this guidance of almost system-average credit growth, in terms of ROA, how should we look at the step-up getting into FY27 and FY28? Where do we see margins settling down? We saw some improvement on core NIMs. On fee income, particularly the retail side was slightly weaker—I understand it's because of the cards. But at 1.2% fee income, how should we see it scaling up, maybe towards 1.5%? How much time would it take? On the ROA specifically, would it be more led by NIMs and fees, or by cyclical credit growth?

Viral25:48

Let me answer that. Let's take the current ROA as the base at 45 basis points. Our journey to 1%—we're looking at equal contribution from both credit losses reduction and operating profit improvement. Within operating profits, some improvement on NIM, much more on fees, and much more on expense optimization. The expense base we're looking at controlling, and as the asset side starts growing, we'll see optimizations. That's how we're looking at the path to get back to 1% ROA.

Kunal Shah26:30

So more will be from fee income. What will actually drive that? This quarter saw better growth in disbursements across products, but it's still not reflecting in overall fees. Is it once the card issue is resolved, or will there be more contribution? Looking at the retail and wholesale breakup, it appears pretty sticky.

Rajiv Anand26:55

Your comment on fees is fair, but that really is the opportunity for us—to go after multiple lines of fee businesses. Your point on cards is fair, but there's been a lot of work happening in terms of optimizing some of the fees we charge our customers—in some cases somewhat lower than industry levels. There have been some changes in locker fees, for example. From a productivity perspective, we can do more on sale of insurance and mutual funds and other investment products. There is work happening on that.