July/August - 2009...2009 Raised Rs 1,000 million through preferential issue of shares IPO - raised...

July/August - 2009

22

Disclaimer

This presentation has been prepared by IndusInd Bank Limited (the “Bank”) and is being furnished to you, the recipient, solely for your information and may not be reproduced, delivered or transmitted (in whole or in part), directly or indirectly, by any means to any other person in any manner.

Certain statements in this presentation may not be based on historical financial information or facts and are or may be “forward-looking statements”. These statements are based on current expectations and assumptions and are based on currently available information. Actual results are subject to a number of risks and uncertainties, which could cause the Bank’s actual performance to differ materially from those anticipated, including future changes or developments in the Bank’s business, its competitive environment and political, economic, legal and social conditions. Any reference to past performance should not be taken as an indication of future performance. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the Bank’s securities should not place undue reliance on these forward-looking statements. The information contained in this presentation is only current as of its date. The Bank may alter, modify or otherwise change in any manner the content of this presentation, and the Bank does not intend or assume any obligation to update any of these statements.

This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation has been prepared for persons outside the United States and should not be released or distributed in the United States. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities of the Bank by any person in any jurisdiction, including India and the United States. No part of this presentation should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. The Bank’s equity shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws in the United States and, as such, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to the registration requirements of the Securities Act.

33

Bank in Transformation Bank in Transformation –– Key TakeawaysKey Takeaways

Agenda

Overview of IndusInd BankOverview of IndusInd Bank

Financial PerformanceFinancial Performance

Overview of IndusInd BankOverview of IndusInd Bank

55

A New Generation Private Sector Bank

Overview

Incorporated in 1994

Widespread & loyal customer base of ~ 2.02 million as at June 30, 2009

Pan India presence through a network of 180 branches, 410 marketing offices, 378 ATMs, representative offices in Dubai and London and strategic alliances in UAE and Qatar as at June 30, 2009

Received RBI authorization for 30 new branches, 50 offsite ATMs (14 opened) and 6 mobile ATMs

2nd largest financier of Commercial Vehicles

Expertise in Commercial and Small Business Sectors; major player in cross border remittances

Strong enterprise risk management framework and a robust technology platform

Total Assets of Rs 278 billion as at June 30, 2009

CAR at 12.1% as at June 30, 2009

682 751

1,483

FY07 FY08 FY09

Net Profit

Income (Rs Mn) Net Profit (Rs Mn)

CAGR: 25.9%CAGR: 47.5%

209,271232,619

276,147

FY07 FY08 FY09

Total Assets

Total Assets (Rs Mn)

CAGR: 14.9%

14,60218,807

23,0952,842

2,976

4,563

FY07 FY08 FY09

Interest Income Other Income

66

With 15 years of Operating History

1st to implement the RBI - EFT scheme with MoneyGram International & Zoha Inc. USA; similar tie ups with exchange houses in Middle East

GDR - raised Rs 1,460 million, tied up with Cholamandalam MS for bancassuranceSigned an agreement with National Multi Commodity Exchange Ltd as clearing banker

Tied-up with Religare Securities for offering 3-in-1 account covering banking, depository & securities tradingTied up with Aviva Life Insurance for bancassurance

Signed an agreement with NCDEX as clearing bankerOpened its second representative office in London

Ashok Leyland Finance Ltd, a leading NBFC merged with the Bank (total 115 branches), opened representative office in Dubai

IndusInd Enterprises & Finance Ltd, a NBFC & one of the promoters of the Bank amalgamated with the BankIncreased branch network to 53

Incorporated in 1994; Promoted by a group of Non Resident Indians. Started operations with Rs 1000 Mn Capital

RBI approval received for 30 new branches and 50 off site ATMLaunched new Brand Campaign

Appointed as Clearing & Settlement Bank at all major Tea Auction centresTied up with BONY Mellon for on line remittances from United States to India

1994

1995

1997-00

2002

2003

2004

2005

2006

2007

2009

Raised Rs 1,000 million through preferential issue of shares

IPO - raised Rs 1,800 million, became clearing bank to First Commodities Clearing Corporation of India

Awards/Recognition: The Smart Workplace - Economic Times, Best CSR Practice Company – BSE/NASSCOM

New management team headed by Romesh Sobti inducted from ABN AMRO Bank NV

GDR Issue - raised Rs 2,222 million; Ratings: ICRA Highest A1+ - CDs, Crisil Highest P1+: CDs, FDs New Launch/Rollout: Mid market Investment Bank, 3rd Party Distribution Platform, Warehouse Receipt Finance

Extended microfinance to 300,000+ women by partnering leading MFIs like SKS MircofinanceExtensive deployment IT initiatives

Became clearing/settlement bank for NSE currency futures exchange

2008

1997,1998 – Ranked Best Bank by Financial Express. 2000 – Became clearing/settlement bank for BSE/NSE

77

In Growth Mode

1.4% 1.5%

2.0%

2.6%

FY07 FY08 FY09 Q1FY10

Net Interest Margin (NIM) RoA RoE

Cost to Income Ratio Net NPA Revenue/Employee (Rs Mn)

Significant improvement in operating metrics since the new management took charge in February 2008

0.3% 0.3%

0.6%

1.3%


6.5% 6.8%

10.4%

22.8%


66.7% 67.2%59.8%

48.8%


2.5%2.3%

1.1% 1.0%


2.0 2.1 2.2

3.0


A Bank in Transformation A Bank in Transformation –– Key TakeawaysKey Takeaways

99

What Changed Since February 2008

New execution-focused management brought on board from a prominent foreign bank

Business segments reorganized to boost profitability

Ramped up workforce and branch network

Focus on improving the liability side of balance sheet

Right pricing the asset book

Thrust on fee income

Mission and measurable targets set

11

Achieving efficiency to boost profitability

Risk organization revamped

22

33

44

55

66

77

88

99

1010

New Execution-focused Management

Management TeamManagement Team DesignationDesignation Previous AssignmentsPrevious Assignments

Romesh Sobti Managing Director & CEO

Executive Vice President – Country Executive, India and Head, UAE & Sub-continent at ABN AMRO bank N.V.Has been associated with ANZ Grindlays Bank plc & State Bank of India in his 33 year career

Paul Abraham Chief Operating Officer MD of ABN AMRO Central Enterprise ServicesCOO of ABN AMRO Bank in India

Sumant Kathpalia Head – Consumer Banking Head - Consumer Banking, ABN AMRO Bank India

Suhail Chander Head – Corporate & Commercial Banking Head - Consumer & Commercial Banking, ABN AMRO Malaysia & Singapore

KS Sridhar Chief Risk Officer Country Risk Officer, ABN AMRO India

J Moses Harding Head – Global Markets GroupHead - Treasury, International & Capital Markets since 2003 at IndusIndVarious positions at State Bank & Centurion Bank

SV Parthasarathy Head – Consumer Finance Executive Director, Ashok Leyland Finance

Ramesh Ganesan Head - Transaction Banking Head - Transaction Banking, ABN AMRO India

SV Zaregaonkar Chief Financial Officer & Head - Investor Relations

Joined IndusInd in 1995 as Head OperationsVarious positions at Dena Bank

Suresh N Pai Head – Corporate Services & Communication Joined IndusInd in 1996Various positions at Corporation Bank

Zubin Modi Head – Human Resources HR head, ICICI Lombard

4,251 Employees as at March 31, 2009 vs.2,869 as at March 31, 2008; significantly ramped up client-facing employee base

Senior management team drawn from top private sector and foreign banks

Majority of the Board of Directors are Independent Directors

1111

Stated Ambition with Measurable Targets

Mission StatementMission StatementMission Statement

To position IndusInd Bank as a Top 3 performer in the new private bank space in 3 years

ProfitabilityProfitability

ProductivityProductivity

EfficiencyEfficiency

Mea

sure

d B

y

RoA

RoE

Net Interest Margins

Cost to Income Ratio

Revenue per Employee

Net NPAs

Obj

ectiv

es

1212

Reorganization of Business Segments

Global MarketsGlobal Markets Transaction BankingTransaction Banking

Product Groups

Client Groups

Consumer BankingConsumer Banking Corp. & Commercial BankingCorp. & Commercial Banking

Consumer Finance

Retail Liabilities

Corporate & Investment Banking

Commercial Banking

Business Banking

Financial Institutions & Public Sector

Reorganized business into client based units and product groups that work across client groups with the objective to enhance focus and customer orientation and service levels; also restructured geographical structure, regional offices and branch structure

Various initiatives undertaken within each business segment to enhance customer acquisition and visibility

Each vertical headed by competent personnel with extensive experience

Banking Channel Management & ServicesWealth Management & Third Party Distribution

1313

Revitalizing Distribution and Workforce

FY07FY07 FY08FY08 FY09FY09 Q1FY10Q1FY10

Branch Network 170 180 180 180

ATMs 178 336 356 378

Distribution Centres 410 410 410 410

2,6132,869

4,2514,500


Ramped up work force (specially client-facing) to match its business expansion initiatives

Pool drawn from peer banks and foreign banks

Variable pay structure introduced in line with industry practices

Distribution infrastructure being strengthened

Branch/Representative OfficeStrategic Alliance

Work force additions to help drive business growth

No. of Employees

30 new Branches and 36 Off Site ATM licenses are on hand

1414

32,54631,220

26,788

23,307

20,788

24,456

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 June-09

Below 15 Lacs (Rs. Mn.)

Improving Liability side of Balance Sheet

42,549

29,88326,327

43,709

20.2%19.2%

15.7%14.9%

0

10,000

20,000

30,000

40,000

50,000

FY07 FY08 FY09 Q1FY1010%

12%

14%

16%

18%

20%

22%

CASA (Rs.Mn) Ratio

CASA Uptick

Structural Shift: Retailisation of Liability Products

Top priority of the management towardsBuilding CASAIncreasing the retail proportion in the term depositsBroad basing the wholesale depositsTenor mapping

New product launches, restructuring of branch network & focus on self employed and small business has accelerated the CASA momentum –evident in the rise in CASA ratio from 15.7% in FY08 to 20.2% in Q1FY10

Maturity profile of Deposits (Rs Mn)

42% 39% 38% 40%

30% 35% 37% 37%

14% 13% 12% 12%14% 12% 12% 12%


<1 Year 1-3 Years 3-5 Years >5 Years

176,448 190,374 221,103 216,388

1515

Right Pricing of Asset Book impacting NII

Differential risk-based loan pricing for each customer segment

Increased focus on Small Business & Mid - Corporates

Strong traction in the high yielding consumer finance division

Churning of old loans with new higher yielding loans

Priority Sector Lending

Achieved the RBI-prescribed target as well as sub-targets for Priority Sector Advances

Direct agricultural advances, warehouse financing, finance to small enterprise and micro

finance

1616

Thrust on Driving Revenues from Fee Income

(Rs Mn)(Rs Mn) FY08FY08 FY09FY09 GrowthGrowth Q1FY09Q1FY09 Q1FY10Q1FY10 GrowthGrowth

L/C, BG, FIBC/FOBC 324 414 27.7% 102 104 2.1%

Processing fees 435 471 8.2% 60 114 89.1%

Foreign exchange profit 289 719 148.8% 119 174 45.4%

Insurance 386 638 65.3% 122 172 40.3%

Mutual funds 31 36 16.1% 9 24 164.4%

AQB, collection, etc 392 519 32.4% 92 114 24.3%

Others 322 430 33.6% 194 240 23.2%

Total core fee 2,179 3,227 48.1% 700 940 34.3%

Committed to broaden the fee income base and its contribution to the profits

Introduction of dedicated product portfolio to provide cash management, trade and financing, supply chain financing, global remittances, commodity financing, and electronic banking services to clients across business groups

Realignment of pricing on its basic products such as demand drafts and lockers and increased focus on building momentum in the third party sales of insurance and mutual funds

Thrust on cross selling to existing client base using Relationship Managers and Managed Sales

Witnessed considerable acceleration in fees from transactional services, third party distribution fees, trade and foreign exchange fees, as well as basic services like loan processing charges, and average quarterly balance penalties over the last fiscal year

1717

Achieving Efficiency to Boost Profitability

Cost to Income Ratio Net NPA Revenue/Employee (Mn)

70.9%65.5%

58.3%51.8% 48.8%

Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10

2.4%2.2%

1.3%1.1% 1.0%


2.1 2.02.4

2.9 3.0


Cost to Income ratio has improved considerably on the back of centralization of operations and rationalization of distribution channels

Thrift mind set and various cost control measures adopted by the management has also helped to curtail costs

Rationalization of compensation structure to a variable pay model has boosted productivity

Employees have been re-deployed / retrained for suitable job roles to improve productivity

Consequently, the bank has achieved a 42% rise in revenue per employee in Q1FY10 as compared to Q1FY09

Centralized risk functions and strong risk management systems has helped to keep credit risk in check

Net NPA has come down significantly over the last fiscal as the management has reinforced risk management systems with best industry practices and resolved some long standing NPLs

1818

Employee Efficiency - Key Metrics

FY08FY08 FY09FY09 GrowthGrowth Q1FY09Q1FY09 Q1FY10Q1FY10 GrowthGrowth

Revenue / Employee 2.09 2.15 3.2% 2.06 3.02 47.0%

Staff Cost / Employee 0.43 0.44 3.5% 0.49 0.54 11.1%

Staff Cost / Revenue 20.4% 20.5% 0.4% 23.6% 17.9% -24.4%

(Rs Mn)

1919

Revamped Risk Organisation

- All Risk Classes Unified – Integrated Risk Management

- New Functions CreatedRisk OrganisationRisk Organisation

Credit Approval & Credit Approval & MonitoringMonitoring Credit Risk MgmtCredit Risk Mgmt Market Risk Mgmt Market Risk Mgmt

& ALM& ALMOperational Risk Operational Risk

MgmtMgmtFin Restr & Fin Restr & ReconstnnReconstnn

CQA & Loan CQA & Loan ReviewReview

Risk and Self Control Assessment (RCSA)Key Risk Indicators (KRIs.)Loss Data CollectionRisk Profiling of branchesOperational Risk Assessment Process for New ProductsBusiness Continuity Plan (BCP)

Separate group monitors NPLsAccount-wise monitoring & recovery mechanism

Quality check on entire credit processRevalidation of credit ratingTracking of portfolio quality

Proactive Monitoring of Risk & exposuresDaily valuation VaR & PV01 Based Limit.Online monitoring of Risk parameterLiquidity Gaps monitoring – DailyParallel monitoring of intra-day liquidity position.Duration based gap approachStress testing for Liquidity, interest and foreign exchange riskRobust ALM system Fund Transfer Pricing (FTP)

Risk Rating Models revised and benchmarked against external ratingBasel II implementation ICAAP Stress testingPortfolio Mgmt & Credit Quality Monitoring reinforced

Credit Appraisal/ Approval process revampedCredit standards tightenedCredit Admin reinforced and centralised in hubsEarly waning signals/ Exceptions trackingEnhanced monitoring mechanism

Financial PerformanceFinancial Performance

2121

Profit and Loss Account


Net Interest Income 3,008 4,590 52.6% 929 1,674 80.1%

Non Interest Income 2,976 4,563 53.3% 649 1,728 166.1%

Total Net Income 5,984 9,153 53.0% 1,579 3,401 115.5%

Operating Expenses 4,022 5,470 36.0% 1,120 1,658 48.1%

Operating Profit 1,962 3,683 87.7% 459 1,743 280.0%

Provisions & Contingencies 819 1,408 71.9% 154 343 123.0%

Profit before Tax 1,143 2,275 99.1% 305 1,400 359.2%

Provision for Tax 392 792 101.8% 114 535 369.9%

Profit after Tax 751 1,483 97.6% 191 865 352.8%

(Rs Mn)

2222

Balance Sheet


Capital & Liabilities

Capital 3,200 3,552 11.0% 3,552 3,552 0.0%

Reserves and Surplus 10,297 13,092 27.1% 12,294 13,952 13.5%

Deposits 190,374 221,102 16.1% 181,160 216,388 19.4%

Borrowings 10,954 18,565 69.5% 29,134 23,413 -19.6%

Other Liabilities and Provisions 17,793 19,836 11.5% 17,501 20,667 18.1%

TOTAL 232,618 276,147 18.7% 243,641 277,972 14.1%

Assets

Cash and Balances with RBI 15,263 11,908 -22.0% 16,295 14,024 -14.0%

Balances with Banks 6,518 7,329 12.4% 5,160 6,218 20.5%

Investments 66,297 80,834 21.9% 72,704 75,845 4.3%

Advances 127,953 157,706 23.3% 132,682 164,516 24.0%

Fixed Assets 6,251 6,232 -0.3% 6,280 6,213 -1.1%

Other Assets 10,336 12,1438 17.4% 10,520 11,156 6.1%

TOTAL 232,618 276,147 18.7% 243,641 277,972 14.1%

Core Banking (Advances + Deposit) 318,327 378,808 19.0% 313,842 380,904 21.4%

(Rs Mn)

2323

Other Income


Fee Based Income 1,890 2,509 32.7% 523 715 36.7%

Profit on Exchange Transactions 289 719 148.8% 120 174 45.5%

Profit on Sale of Investments 194 1,216 525.3% (51) 868 1801.2%

Profit/(Loss) on sale of assets (7) (306) (63) (86)

NPA Recovery 423 238 63 5

Lease Rentals 187 187 57 52

Total 2,976 4,563 53.3% 649 1,728 166.1%

(Rs Mn)

2424

Operating Metrics

Net Interest Margin (NIM) RoA RoE

Cost to Income Ratio Net NPA Revenue/Employee (Rs Mn)

QoQ delivery of strong operating performance

1.7%1.8% 2.0%

2.5% 2.6%


0.3%

0.5%0.7% 0.8%

1.3%


5.7%

9.8%12.6%

14.1%

22.8%


70.9%65.5%

58.3%51.8% 48.8%


2.4%2.2%

1.3%1.1% 1.0%


2.1 2.02.4

2.9 3.0


25252525

Well Diversified Asset Book

1.1%

1.9%

1.8%

1.6%

1.1%

2.9%

2.1%

3.0%3.7%

4.3%3.7%

1.6%

1.8%

32.1%

37.4%

ConstructionGems & Jew ellery SteelNBFCs(Excl. HFCs) Trading - Wholesale PharmaceuticalsReal EstateFood Credit TextilesPetroleum & Products TelecomMFI Engg. & Mach. Other IndustryConsumer Finance

Asset Book (Rs Mn)

Risk Diversification – Analysis of Bank’s Exposure (incl NFB)

Industry-wise Corp. & Comm. Banking Exposure Segment-wise Cons. Finance Exposure

0.3%5.2%

18.4%

4.3%3.5% 2.5%2.7%

62.5%

0.7% Commercial Vehicles

Equipment Financing

Tw o w heelers

Three w heelers

Car Loans

Utility Vehicles

Housing Loans

Staff Loans, Personal Loans & Others

CCB Advances

44.2% 45.2%56.8%58.5%

41.543.2%

54.8% 55.8%

164,516157,706127,953

110,842


Consumer Finance Division Corporate & Commercial Banking

2626

Favourable Yield / Cost Movement

Yield on Advances

13.4%13.2%

11.8%

9.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%


Cost of Deposits

7.7%8.2%

7.8%

6.7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%


2727

Loan Portfolio - Movement in NPA

FY08FY08 FY09FY09 Q1FY10Q1FY10

CCBCCB CFDCFD TotalTotal CCBCCB CFDCFD TotalTotal CCBCCB CFDCFD TotalTotal

Opening Balance 1,898 1,529 3,427 2,234 1,689 3,923 756 1,795 2,551

Additions 539 1016 1,555 926 1,264 2,190 86 397 483

Deduction 203 857 1,060 2,404 1,158 3,562 278 345 623

Gross NPA 2,234 1,689 3,923 756 1,795 2,551 564 1,847 2,411

Provisions 566 447 1,013 339 420 759 343 403 746

Net NPA 1,669 1,241 2,910 411 1,374 1,792 221 1,444 1,665

Total Advances 55,333 72,620 1,27,953 86,432 71,274 1,57,706 91,729 72,787 1,64,516

% of Gross NPA 4.0% 2.3% 3.0% 0.9% 2.5% 1.6% 0.6% 2.5% 1.5%

% of Net NPA 3.0% 1.7% 2.3% 0.5% 1.9% 1.1% 0.2% 2.0% 1.0%

Provision Coverage 25.3% 26.5% 25.8% 44.9% 23.4% 29.8% 60.8% 21.8% 30.9%

(Rs Mn)

CCB - Corporate and Commercial Banking

CFD - Consumer Finance Division

2828

CFD - Segment wise NPA

Q1FY10Q1FY10 CV CV CE CE 3W 3W TW TW CarsCars BILLS BILLS HL HL TOTAL TOTAL

Net Book Assets 41,361 10,166 6,213 8,356 5,161 111 1,444 72,812

Add: Provision 217 29 8 95 54 - - 403

Gross Book Assets 41,578 10,195 6,221 8,451 5,215 111 1,444 73,214

Gross NPA Asset 920 158 44 463 262 - - 1,847

Net NPA Asset 703 129 36 367 209 - - 1,444

Gross NPA Asset / Gross Book Asset 2.2% 1.5% 0.7% 5.5% 5.0% 0.0% 0.0% 2.5%

Net NPA Asset / Net Book Asset 1.7% 1.3% 0.6% 4.4% 4.0% 0.0% 0.0% 2.0%

(Rs Mn)

CFD - Consumer Finance Division

2929

Loan Portfolio – Restructured Standard Advances

Q1Q1--10*10* Q1Q1--0909 Q4Q4--09*09*

No.No. Rs MnRs Mn No.No. Rs MnRs Mn No.No. Rs MnRs Mn

Restructured Loans (Net) 129 760 18 20 126 380

Advances 164,520 134,680 157,710

Restructured Loans 0.5% 0.0% 0.2%

* Includes restructuring of consumer / vehicle loans – 118 borrowal accounts involving Rs 72.9 Mn

3030

Shareholding Pattern

Shares held by Custodians & against w hich Depository Receipts have

been issued18.2%

NRIs / Director / Others5.5%

Individuals17.1%

Private Corporates12.7%

FIIs18.3%

MFs / Banks / Insurance Co2.6%

Promoters25.6%

As at June 30, 2009

3131

Management Outlook

Continued focus on Productivity, Profitability & Efficiency

Expected to derive benefit from the current interest rate scenario with

Consumer Loan portfolio carrying historically high fixed yields

Benefit is expected to accrue from the short tenor bulk liability book due to re-pricing

Other income from core business is expected to grow significantly

Increased thrust on Wealth Management (including Non Resident coverage) & third party distribution of investment / products

Significant growth expected in forex revenue with special emphasis on small and mid size business clients

Investment Banking business expected to grow with the infrastructure in place

Focus on garnering a decent market share in debt and equity raising program of mid sized corporate clients

Continue to manage the credit risk of both corporate and Consumer Finance portfolios to keep delinquencies under control

Thank youThank you

July/August - 2009...2009 Raised Rs 1,000 million through preferential issue of shares IPO - raised...

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Transcript of July/August - 2009...2009 Raised Rs 1,000 million through preferential issue of shares IPO - raised...