Corporate Presentation - IndusInd Risk Management framework for effective management of risks ... Ashok Leyland Finance Ltd, ... Working Capital Finance

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  • June 2015

    Corporate Presentation

  • hvsv

    2

    Incorporated in January, 1994; widespread customer base of ~6.84 million as at March 31, 2015

    Pan India presence through a network of 801 branches and 1,487 ATMs as at March 31, 2015

    Diversified loan book Split between Corporate & Commercial Banking and Consumer

    Finance at 59% and 41% respectively as at March 31, 2015

    Enterprise-wide Risk Management framework for effective management of risks

    Total Assets of over Rs 1,091bn and Net Worth of over Rs 100bn as at March 31, 2015

    IndusInd Bank An Overview

    Revenue (Rs mn) Net Profit (Rs mn) Total Assets (Rs bn)

    733

    870

    1,091

    FY13 FY14 FY15

    CAGR of 22.0%

    10,612

    14,080

    17,937

    FY13 FY14 FY15

    CAGR of 30.0%

    35,958

    47,812

    58,241

    FY13 FY14 FY15

    Other Income Net Interest Income

    CAGR of 27.3%

  • 3

    Over 20 years of Operating History

    New Management team headed by Mr. Romesh Sobti inducted from ABN AMRO Bank NV New Launch/Rollout: Investment Bank, 3rd Party Distribution Platform, Warehouse

    Receipt Finance GDR raised US$ 51.73mn (Jun 2008); QIP raised Rs 4,803.5 mn (Aug 2009); QIP raised

    Rs 11,727.5 mn (Sept 2010) Tier II Issue raised Rs 4,200 mn (Mar 2010) Acquired Deutsche Banks credit card business Launched Loans Against Property(LAP) and tied-up with HDFC for mortgage origination Innovative product service offering like Choice Money ATM & Check on Cheque Premium Client Segments (Indus Select & Indus Exclusive) introduced Pre-2008

    Planning Cycle I: FY09-FY11

    Incorporated in 1994; Promoted by a group of Non Resident Indians. Started operations with Rs 1,000 mn capital IPO raised Rs 1,800 mn (Dec 1997) Tie-ups with exchange houses in Middle East and banks in the United States IndusInd Enterprises & Finance Ltd, an NBFC & one of the promoters of the Bank amalgamated with the Bank Ashok Leyland Finance Ltd, an NBFC merged with the Bank; opened representative office in Dubai Tied up with Aviva Life Insurance and Cholamandalam MS for bancassurance GDR raised US$ 33.83mn (Mar 2007)

    QIP raised Rs 20,006.4 mn (Dec 2012) New products launched Prepaid Forex cards,

    Tractor financing; Opened Currency Chests Implemented Finacle 2.0 core banking system Innovations introduced Instant Redeem, Direct

    Connect & Cash On Mobile, My Account My Number

    New segments introduced MFI through Partnership Model; Launched Rural Banking vertical and Govt. Banking vertical

    Planning Cycle II: FY12-FY14

  • ow

    4

    Defined Business Units

    Product Groups

    Client Groups

    Consumer Banking Corporate and Commercial Banking

    Consumer Finance

    Retail Liabilities

    Corporate & Investment Banking

    Commercial Banking

    Business Banking

    Public Sector Unit

    Banking Channel Management & Services

    Wealth Management & Third Party Distribution

    Global Markets Transaction Banking

    Bu

    sin

    ess U

    nit

    s

    Financial Institutions Group

    Credit Cards

  • 5

    Key Strengths

    Universal Banking Offerings

    Growing Liability and Fee Franchise

    Focused Execution on Risk, Operations and Portfolio

    Well Defined Expansion Strategy

    History of Technology Refresh and Innovation

    Stable Asset Quality

    Experienced Management Team

    1

    2

    3

    4

    5

    6

    7

  • 6

    Planning Cycle 3 (FY15-FY17) F

    ocu

    s o

    n

    Market Share with Profitability Strategy

    Intelligent Domination and Specialisation Theme

    New Yield & Fee Boosters

    Scaling Up Client Base

    Density in Branch Network

    Growth in Business As Usual

    Planning Cycle 3 Strategy

    Well Defined Expansion Strategy 1

  • Planning Cycle 3:Growth Themes

    Specialization

    in Corporate

    Banking

    Building a

    High Street

    Brand

    Digitization of

    Businesses

    Rural Banking

    Vertical

    Focus on

    Productivity

    Continued

    Domination in

    Vehicle

    Financing

    Prioritize

    scale in Home

    Markets

    Well Defined Expansion Strategy 1

    7

  • Tractor Financing Targeting S of SME Retail Trade / FX

    Retail Assets Ramp Up Real Estate Innovative Customer

    Offerings

    Front and Back Office

    optimization

    Full suite of Rural

    Products

    Retail Assets

    Ramp Up

    Asset Reconstruction

    Planning Cycle 3: Key New Initiatives

    Well Defined Expansion Strategy 1

    8

  • CASA Ratio

    Branch Network

    Customer Base

    Loan Growth

    34%

    801

    6.84 mn

    25%

    Planning Cycle 3 (FY15-FY17) R

    esu

    ltin

    g i

    n

    Planning Cycle 3: Pillars of Growth

    Well Defined Expansion Strategy 1

    9

    FY15 Outcome

    Fee Growth 27%

  • 10

    Diversify Dominate

    Differentiate

    Retail Assets

    Ramp Up

    Project Underwriting

    And Advisory

    Vehicle Finance

    Market and Client

    Segmentation

    Investment Banking

    S of SME

    Home Markets

    Front and Back Office

    Optimisation

    Gems & Jewellery

    Inclusive Banking

    Innovative Customer

    Offerings

    Rural & Agri Banking

    PC 3 Ambition : 3D to Double the Bank

    Well Defined Expansion Strategy 1

  • 11

    Name Designation Occupation / Experience

    Mr. R. Seshasayee Part time Non-executive Chairman

    Non-Executive Chairman, Infosys; Non-executive Vice Chairman of Ashok Leyland; Past President of the Confederation of Indian Industry

    Mr. Romesh Sobti Managing Director & CEO Whole-time Director

    Mr. K. Ashok Kini Independent Non-Executive Director

    Managing Director (Retired), State Bank of India

    Mrs. Kanchan Chitale Independent Non-Executive Director

    Practicing Chartered Accountant; MP Chitale & Co

    Mr. Vijay Vaid Independent Non-Executive Director

    Industrialist and Member of Executive Committee of Automotive Component Manufacturers Association

    Mr. T. Anantha Narayanan Additional Independent Non-Executive Director

    Executive Director (Retired), Ashok Leyland Ltd.

    Mr. Ranbir Singh Butola Additional Independent Non-Executive Director

    Ex-Chairman of Indian Oil Corporation Limited

    Mr. Y. M. Kale Additional Non-Independent and Non-Executive Director

    Past President Institute of Chartered Accountants of India

    Board of Directors

    Experienced Management Team 2

  • 12

    Name Designation Prior Experience

    Mr. Romesh Sobti Managing Director & CEO Over 40 years banking career with ABN AMRO Bank N.V., ANZ Grindlays Bank Plc & State Bank of India

    Mr. Paul Abraham Chief Operating Officer Managing Director of ABN AMRO Central Enterprise Services

    Mr. Suhail Chander Head Corporate & Commercial Banking

    Head Consumer & Commercial Banking, ABN AMRO Malaysia & Singapore

    Mr. Sumant Kathpalia Head Consumer Banking Head Consumer Banking, ABN AMRO Bank (India)

    Mr. Kalpathi Sridhar Senior Executive Vice President - Risk

    Senior Vice President and Country Risk Officer, ABN AMRO Bank (India)

    Mr. Ramaswamy Meyyappan Chief Risk Officer Chief Risk Officer at JP Morgan Chase Bank NA, Mumbai

    Mr. S.V. Zaregaonkar Chief Financial Officer Joined IndusInd Bank in 1995 as Head Operations; Chief Manager Dena Bank

    Mr. Arun Khurana Head Global Markets Group Regional Head Corporate Solutions Asia-Pacific Markets of RBS Singapore

    Mr. S.V. Parthasarathy Head Consumer Finance Executive Director, Ashok Leyland Finance Limited

    Mr. Ramesh Ganesan Head Transaction Banking Executive Director, ABN AMRO Bank (India)

    Mr. Sanjay Mallik Head Investor Relations & Strategy

    Director, BROTKO, his own financial services firm; Held prior positions at ANZ Bank, ABN AMRO Bank (India) and Standard Chartered Bank

    Ms. Roopa Satish Head, Corporate, Institutions & Investment Banking

    Head Mid Markets (Western Region), ABN AMRO Bank (India)

    Mr. Sanjeev Anand Deputy Head Corporate & Commercial Banking

    Head Commercial Banking, ABN AMRO Bank (India)

    Mr. Zubin Mody Head Human Resources Head HR, ICICI Lombard General Insurance Company Limited

    The Core Executive Team

    Experienced Management Team 2

  • 13

    M&HCV Finance

    PSU Banking

    Gems & Jewellery

    Investment Banking

    Leading financier in Medium and Heavy Commercial Vehicle segment Tie-ups with major M&HCV manufacturers

    Early entrants to creation of e-procurement market places

    Agreement to acquire (subject to regulatory approvals) RBS Diamond & Jewellery lending business including a loan portfolio of Rs. 45bn

    Specialization in Trade Finance for the sector

    In Top 3 in Underwriter League Tables for Loans Mandated Arranger in terms of number of deals (Source: Bloomberg)

    Inclusive Banking

    Partnership program with Not-For-Profit NGOs covering over 13,000 villages and 1.7mn women entrepreneurs

    Guiding Towards Selective Domination

    Experienced Management Team 2

    Two Wheelers Leading financier with over 7,00,000 2-wheelers financed in FY15

  • 14

    Performance Across Key Financial Vectors

    Experienced Management Team 2

  • 15

    Well Diversified Loan Book

    Universal Banking Offerings 3

    Corporate Banking

    Mar-15

    Large Corporates

    1,99,648 29%

    Mid size Corporates

    1,14,547 17%

    Small Corporates

    89,573 13%

    Total Advances 4,03,757 59%

    Loan Book (Rs mn)

    (Rs mn) (Rs mn)

    Consumer Finance Mar-15

    Comm. Vehicle Loans 1,06,178 15%

    Utility Vehicle Loans 20,171 3%

    Small CV 18,432 3%

    Two Wheeler Loans 28,082 4%

    Car Loans 31,462 5%

    Equipment Financing 28,163 4%

    Credit Card 6,979 1%

    Loan Against Property 37,836 5%

    BL,PL,GL,etc 6,822 1%

    Total Advances 2,84,125 41%

    51% 45% 41%

    49% 55%

    59% 4,43,206

    5,51,018

    6,87,882

    FY13 FY14 FY15

    Consumer Finance Division Corporate & Commercial Banking

    Comm. Vehicle Loans 15%

    Utility Vehicle Loans

    3% Small CV

    3%

    Two Wheeler Loans

    4%

    Car Loans 5%

    Equipment Financing

    4% Credit Card

    1% Loan Against Property

    5% Others 1%

    Large Corporate

    29%

    Medium Corporate

    17%

    Small Business

    13%

  • Andhra Pradesh 5%

    Assam 2%

    Bihar 2%

    Chandigarh 0%

    Chhatisgarh 3% Dadra & Nagar

    Haveli 0%

    Delhi 2%

    Goa 1%

    Gujarat 6%

    Haryana 6%

    Himachal Pradesh 1%

    J&K 0%

    Jharkhand 3%

    Karnataka 3%

    Kerala 10%

    Madhya Pradesh 5%

    Maharashtra 5%

    Mizoram 0%

    Orissa 3%

    Pondicherry 0%

    Punjab 4%

    Rajasthan 11%

    Uttaranchal 0%

    West Bengal 6%

    Sikkim 0%

    Tamil Nadu 10%

    Tripura 1%

    UP 6%

    16

    Well Distributed Vehicle Finance Portfolio

    Universal Banking Offerings 3

    Geographical Distribution of Vehicle Finance Portfolio (Rs 232,488mn) March 31, 2015

    Two Wheeler loans

    Car loans

    M&HCV loans

    Small CV & Utility Vehicle loans

    LCV Loans

    Telangana 3%

    Manipur, 0%

  • 17

    Distribution of Corporate & Commercial Banking Network Product and Service Offerings

    Working Capital Finance

    Short Term Finance

    Bill Discounting

    Export Credit

    Term Lending

    Buyers Credit / Suppliers Credit

    Asset based financing

    Lease Rental Discounting

    Supply Chain Finance

    Warehouse Receipt Finance

    Agri Finance

    Inclusive Banking

    Non Fund Based Services

    Value Added Services

    Letter of Credit

    Bank Guarantees

    Forward Contracts / Derivatives

    Channel Financing / Associate Financing

    Cash Management Services

    Corporate Salary Accounts

    Liability/ Investment Products

    Commodity Finance

    Project Finance

    Forex / Derivative Desks

    Fund Based Services

    Comprehensive Corporate and Commercial Banking Offering

    Universal Banking Offerings 3

    Andhra Pradesh

    Assam Bihar

    Punjab

    Chandigarh

    Chhatisgarh

    Gujarat

    Haryana

    Jharkhand

    Karnataka

    Kerala

    Madhya Pradesh

    Maharashtra

    Orissa

    Rajasthan

    West Bengal

    Tamil Nadu

    UP

    Corporate & Institutions Banking

    Public Sector Units

    Business Banking Group

    Commercial Banking

    Goa

    Tripura

    Nagaland

    Meghalaya

    Pondicherry

    Uttarakhand

    HP

    Non Fund Based Services

    Structured Finance

    Debt Syndication

    Advisory Services

    Investment Banking

    Telengana

  • 18

    Efficient Distribution and Cross Sell

    Universal Banking Offerings 3

  • 19

    *includes 58 specialized branches

    Particulars 2013 2014 2015

    Branch Network 500 602 801*

    ATMs 882 1,110 1,487

    Distribution Network (as of March 31)

    Large Distribution Network

    Growing Liability and Fee Franchise 4

    Note: Numbers given above are total branches in each state

  • 20

    CASA Uptick

    Savings Account (SA) Current Account (CA)

    Building CASA traction

    Expanding branch network

    Some leverage from SA rate advantage

    Focus on target market segments

    Government business

    Capital market flows

    Key Non Resident markets

    Self employed and Emerging Corporate businesses

    Differentiated Service Propositions

    Improving Current and Savings Account Profile

    Growing Liability and Fee Franchise 4

    1,58,674

    1,96,909

    2,52,996

    29.3%

    32.6% 34.1%

    10%

    16%

    21%

    27%

    33%

    38%

    0

    50,000

    1,00,000

    1,50,000

    2,00,000

    2,50,000

    3,00,000

    March 31, 2013 March 31, 2014 March 31, 2015

    CASA (Rs. mn) % of Total Deposits

    88,346 97,757

    1,23,560

    16.3% 16.2%

    16.7%

    5%

    7%

    9%

    11%

    13%

    15%

    17%

    0

    20,000

    40,000

    60,000

    80,000

    1,00,000

    March 31, 2013 March 31, 2014 March 31, 2015

    CA (Rs. mn) % of Total Deposits

    70,328

    99,153

    1,29,436

    13.0%

    16.4%

    17.5%

    0.00%

    4.00%

    8.00%

    12.00%

    16.00%

    20.00%

    1

    20,001

    40,001

    60,001

    80,001

    1,00,001

    1,20,001

    1,40,001

    March 31, 2013 March 31, 2014 March 31, 2015

    SA (Rs. mn) % of Total Deposits

  • 21

    Diversified Fee Streams

    Growing Liability and Fee Franchise 4

    Core fee growth ahead of loan growth for last 7 years

    Fee income growth 1.8x over FY13-FY15

    Comprises a mix of retail and corporate fee incomes

    Individual fee streams consists of multiple drivers

    Fee income emanating from partnerships include

    Life Insurance Aviva Life Insurance Company India Limited

    General Insurance Cholamandalam MS General Insurance Company Limited

    Health Insurance Religare Health Insurance Company Limited

    Home Loans HDFC Limited

    3 in 1 Accounts Kotak Securities Limited

    Mutual Funds Open architecture

    FY 15 Fee Income of Rs 24,039 mn

  • 22

    Rs mn FY13 FY14 FY15

    Corporate Bank 1165.1 937.0 1,437.2

    Consumer Finance 1031.0 1699.7 1,951.9

    Gross Credit Costs 2196.1 2,636.7 3,389.1 *

    Gross Credit Costs (Basis Points on Advances)

    50 48 49

    PCR 70% 70% 63%

    53% 36% 42%

    47% 64% 58%

    FY13 FY14 FY15

    Corporate Loan Book Consumer Finance Loan Book

    Credit Costs

    Stable Asset Quality 5

    * Includes sale to ARC as permitted vide RBI Circular dated Feb. 26, 2014

  • 23

    0%

    2%

    4%

    6%

    8%

    10%

    12%

    14%

    16%

    18%

    20%

    IB1(AAA)

    IB2+(AA+)

    IB2(AA)

    IB2-(AA-)

    IB3+(A+)

    IB3 (A) IB3-(A-)

    IB4+(BBB+)

    IB4(BBB)

    IB4-(BBB-)

    IB5+(BB+)

    IB5(BB)

    IB5-(BB-)

    IB6(B)

    IB7 (C)

    IB8 (C)

    NPA(D)

    Unsecured Non Fund Based %

    Secured Non Fund Based %

    Unsecured Fund Based %

    Secured Fund Based %

    PERCENT OF RATED PORTFOLIO

    Investment Grade Sub Investment Grade

    Well Rated Corporate Portfolio

    Stable Asset Quality 5

    * IndusInd Bank internal ratings mapped with external ratings for benchmarking

  • 24

    * Credit Risk for 31 March 15 includes CVA (Credit Valuation Adjustment) and UFCE (Unhedged Foreign Currency Exposure) RWA

    Rs mn 31 March 13 31 March 14 31 March 15

    Risk Weighted Assets

    - Credit Risk * 4,62,681 5,86,120 7,67,178

    - Market Risk 23,454 25,169 43,558

    - Operational Risk 46,699 61,310 78,554

    - Total RWA 5,32,834 6,72,598 8,89,290

    Tier I Capital Funds 73,445 85,509 99,750

    Tier II Capital Funds 8,409...

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