Indian Bank (INDIANB) Earnings Call Transcript & Summary

Yes, good evening to all participants. Just an update. I think MD sir has to go for DFS call. So we will have to end the call somewhere at about 6:30. So in the interest of time, we will start the call right away. Sir, what I would request is that -- is the entire management team now there, sir?

Yes, yes.

So good evening, ladies and gentlemen. I welcome you all to the Indian Bank's post results conference call for the first quarter of financial year 2027, hosted by Nuvama Wealth Management. From the top management, we have with us Shri Binod Kumarji, MD and CEO; Shri Ashutosh Choudhuryji, Executive Director; Shri Shiv Bajrang Singh, Executive Director; and Ms. Mini T.M., Executive Director. I request the MD, sir, to briefly summarize the key highlights from Q1 FY '27 results and also provide some strategic direction on growth margins and asset quality, post which we will have a Q&A session. Over to you, sir, and would request to keep your comment brief so that we have more time for Q&A. Over to you, sir.

So Anandji, first of all, I mean, I really -- I'm sorry that I will have to leave at 6:30, but it is something urgent. But this conference can continue, Mr. Ashutosh and madam is here, they can handle. So some questions are there, they can handle. So now coming to the -- first of all, thank you all once again for coming in for this analyst call. So by now, result has been published, and we have seen good growth in deposit also and advance also. Very balanced growth, I will say. Deposit also grew by 13.40%, advance grown by 13.90%. So there is only 40 basis point gap is there. And I believe that gap should be -- deposit and advance growth gaps should remain range bound. Otherwise, if this gap is very wide, then it starts impacting your overall profitability, NIM, et cetera. So very balanced growth. And highlight is CASA has grown by 15.30%, in that savings fund has grown by 13.54%, current account has grown by 26.33%. Advance overall and CD ratio domestic is at 78.66% and CD ratio globally is at 81.06%. CASA, sequentially, it has gone up by 6 basis points, Y-o-Y basis around 86 basis points. Advances has grown by 13.89% to INR 6.85 lakh crores. In that, if you see corporate has grown by 11.49%. RAM has grown 14.80%. Retail has grown by 18.74%. Agriculture, single digit 9.96% because of the transition of the jewel loan, first 2 months because of the various IT issue, various policy are to be framed. But after 2 months, it picked up. Initial 2 months, there was negative growth. After that, it has picked up and we have shown a growth of around 10%. So no concern on that count also. Going forward, we will maintain the growth in agriculture also in the range of whatever we have been getting around 15%, 16% agriculture also, we'll maintain that. MSME 17% growth is there. Overall, RAM share is 60%. Net profit sequentially has gone up by 5.48%, Y-o-Y 10.09% to INR 3,273 crores. Operating profit sequentially 5.13%, Y-o-Y 16.50% to INR 5,557 crores. Good growth in NII, I think Y-o-Y 17% and sequentially 4.59%. NIM, both domestic and global has expanded by 6 basis points. Return on asset also Y-o-Y basis, of course, it has come down by 3 basis points, but sequentially, it has gone up by 3 basis points. Return on equity 19.48%. Cost-to-income ratio, it has come down from March. For whole year, it was -- last year, it was 46%. But for this quarter, it is 44.80%. Going forward, I have given guidance of 45%, so it will remain in that range. So no concern on that front. PCR 98.22%, we could have maintained the last year -- financial year, it was 98.28%, we could have maintained. But then again, net NPA would have come further down from 0.15% to 0.14% or 0.13%. So that's why we live with it. Credit cost 0.47%, in March '26, it has come down to 0.23%. There were some concern in the last analyst meet around credit cost going up, but that is March phenomena. Even last time I have told that is one-off March phenomena, and I'm again saying March, again, it may go up because of the audit, et cetera. But overall, remaining 3 quarters, it will be definitely slippage also and credit cost will be range bound only. Overall capital, my capital is 17.58%. CET1 is 16.51%. Impact of IFR is INR 2,000 crores, that has gone from Tier 2 to Tier 1, impact on 44 basis points. Gross NPA has come down Y-o-Y basis 115 basis points to 1.86%, sequentially 12 basis points. Net NPA is flat at 0.15%. Slippage ratio at 0.77%, last annualized it was 0.96%, so it has come down also. Recovery -- again, recovery -- if you see recovery has -- outpaced slippages, recovery is INR 1,885 crores. Slippage is INR 1,250 crores. One big account, recovery has come in that account around INR 400 crores, which we have booked in this quarter. So it is contributed by that. SMA, of course, SMA overall number is flattish, but SMA-2 more than INR 5 crores has gone up by around INR 190 crores. Out of that, one account DCCO -- that account has come to SMA-2 because of the DCCO, DCCO extension has come and accordingly repayment schedule will also be extended. So demand has been generated. So once we permit extension of the DCCO even that SMA will be within the range. So -- and guidance, almost all guidance we have done -- we are on track. Recovery, we have given guidance of between INR 4,500 crores to INR 5,500 crores. Already, we have achieved almost INR 1,900 crores. Gross NPA also, we will be achieving between 1.50% to 1.60%. So I think we should achieve easily. I don't see any challenge in that. CASA also, I have told 40%. I'm on track of that, 39.73% we have achieved this quarter and going forward. Of course, CASA still is a challenge, but I expect with the support of all the staff and that we will be maintaining that. One good thing I will highlight, participation of branches has increased. Last year during this period, only 25% to 27% branches has achieved the target. But this quarter, they have achieved -- 51% of the branches has achieved their target. So that is one good sign that branches have started participating. So broadly all these things, straight we can come to Q&A so that we can utilize the time.

Thank you, sir. But before we open up the Q&A, one question that I want to ask is that do you see any MSME stress? There are a few banks basically talking about that. And second, have you sanctioned any ECLGS credit? And if you can just talk about what is that as a percentage in absolute amount or maybe percentage of credit?

Yes. See, MSME stress, if you ask me, even we were expecting that there may be some stress. But so far, it is not visible. As -- if you see, my SMA book Y-o-Y basis, it has come down from 7.99% to 4.69%. Sequentially also, it has come down from 4.73% to 4.69%. So, as of now, we are not seeing any stress. But going forward, let us see. And coming on -- and some stress is there, then ECGLS (sic) [ ECLGS ] will come to the rescue of such accounts. ECGLS (sic) [ ECLGS ] total eligible amount is approximately INR 11,000 crores depending on the formula given by the government. And out of that, around INR 5,000 crores has been disbursed.

Sure, sir. Now, I'll open up the floor for Q&A. [Operator Instructions] I think we have our first question from Ajmeraji. [Operator Instructions]

So sir, compliments to you for such a wonderful performance in the first quarter itself. In fact, very good profitability, the operating profit, net profit every -- I mean, you performed on most of the parameters so very well. So my compliments to you for the same. Having said that, sir, since you are there now and you are going to leave a few just thoughts and some observations from you is basically on the same which Anand, I will extend that question only a little further that, of course, you have not seen the -- you said that, that kind of stress has not been visible so far. But INR 5,000 crores has already gone as a disbursement from the ECLGS special credit, which has been started by the government again. So sir, even -- I mean, your SMA-2 numbers have also gone up a little higher from INR 922 crores to INR 1,112 crores. So actually, do you see that if this -- whatever situation, even the -- again, that whatever is happening in U.S., Iran and Israel, Iran and this, whether it is going to have some lasting impact on the -- especially on the small industries and the businessmen here in India? And will you see some stress coming forward in that?

See, as I told you, SMA-2 has gone up because of one account that -- one account as and when we extend DCCO, I think that will go away. So not impact of that. But see, actually, if you ask me, I was also expecting that -- I mean, there should be some impact. But if you see country as a whole, we have shown very great resilience. I was expecting since August 2025 when first time Trump's tariff was imposed. But despite that, if you see because of the internal good demand and good consumption and our exporters have been able to diversify their export from one country to various countries. So we have not seen much of the impact. But still, we remain watchful. And that's why -- that is the reason we have -- last quarter also, we have made impact of -- a provision of INR 310 crores for West Asia crisis, which we have continued and increase of exposure, INR 12 crores, INR 13 crores further we have made. So we remain watchful, but so far, it is not visible. But if something is there, we have capacity to absorb.

The standard advance provision also has -- I mean, you are referring to that, that the standard provision on the standard credit also has gone up from INR 490 crores to INR 733 crores?

No, no. Yes, yes. So impact of West Asia crisis is INR 13 crores in that only. Rest we have made prudently like ECL provision, we have made around INR 1,000 crores. Floating provision for ECL, we have made...

Sir, my second question is -- yes, how much is that?

INR 1,000 crores...

Yes, on ECL total...

INR 1,000 crore we have made additional floating provision.

Floating provision. In addition to whatever earlier provisions were there?

Whatever earlier provisions were, yes.

Sir, on the treasury front, I think in this quarter, there was some good benefits which are enjoyed by many of these banks' treasuries. So, in our case, comparatively, the profit vis-a-vis the last quarter has not gone up to that extent. So whether any -- I mean, anything on that, that we have taken some mark-to-market or more profit has gone into the AFS reserves in the treasury?

Yes, yes. AFS reserve, which was negative last year, it has gone up. AFS reserve, last quarter, it was negative INR 100 crores. Now it has gone up, so -- INR 500 crores, it has gone up. And treasury, in fact, let me tell you I was expecting profit of only INR 250 crores to INR 300 crores, but last week, some yield came down that's why this profit is there. Otherwise, in my calculation, it was only INR 250 crores to INR 300 crores.

Okay, so according to you, this is better what has actually come.

This is better than what I have expected.

Ajmeraji, I think, you're done with 2 questions.

No, just one. Anand, just on the credit front. Going forward, in this quarter, we have moved by about 2.62% as compared to the March. So sir, going forward -- because the overall, we see in the -- the kind of figures or numbers which have come that the overall credit growth, I mean, in the entire -- from the entire banking has gone up. So people are talking about 17%, 18% Bank of Maharashtra, on the whole year, it has given again 27% growth. And this quarter also, it's around -- almost about 5% growth. So for the whole year, the FY '27 now, what do you think the credit growth can be in our bank, sir?

See, growth is not a challenge Ajmeraji, let me tell you. Growth can be done. Whatever you ask if you see, if my agri grew by 16%, my RAM growth itself will be 17%, 18%. We can grow. But we should also, at the same time, remain mindful of the wide between credit growth and deposit growth. So I'm mindful of that because if situation should not come when we start eating our margin. So based on that, balanced growth, I will approach. I can grow deposit by 13%, I won't mind growing advance by 15%. So based on that and also not compromising on the NIM. But 13%, 14% growth is a good growth.

But I think you will achieve 16%.

Next question we'll take from Mahrukh. Mahrukh, please unmute yourself.

Sir, congratulations.

Thank you, Mahrukh.

Sir, I had a couple of questions. Firstly, do you see gold loans picking up? It's competitive. Prices have also been volatile. And then how much has been added to AFS reserve? And the third question is on FCNR. So I saw your comments on TV. You've said it before also in calls that the target is to mobilize $1 billion. But how much have you already mobilized given that this time around, the IRRs look much weaker than the 2013, 2014 IRRs?

See, first, AFS reserve is INR 500 crores this time. Last time, it was minus INR 211 crores. Presently, it is INR 334 crores plus. So total, you can say INR 546 crores. Coming to FCNR. FCNR, we have so far raised around 150 million as of today. Till yesterday, it was 135 million. We have raised around 150 million. And going forward, I have given estimate that I will be able to range between $1.5 billion to $2 billion. Challenge is not in raising FCNR. FCNR, we have a lot of traction. $1 billion pipeline I already have. Challenge is in the funding, whatever demand they are asking, they are taking demand loan or whatever. So challenge is in the funding of that loan, but we are managing and quite hopeful that between [indiscernible] taken together both ECB and FCNR, I will be able to raise it.

Okay, sir. On gold loans?

Sorry, gold loan. Gold loan, see, like last year, I don't expect growth of 28%, 26%. Because that was driven primarily by the -- not by the tonnage, by the price of the gold. But I see around 15%, 16% in the gold loan also -- this year also. And no concern on that. LTV also even after a drop of 30% in the gold loan, our LTV is still at a very comfortable level. So don't see any stress in that.

Next question we'll take from Jayant Kharote. Jayant, please unmute yourself.

Congrats sir on a good set of numbers. Sir, first question is on the margins. We saw a healthy expansion Q-o-Q. I think one of the positive surprises come from the cost of deposits. Q-o-Q, we've seen some tightening in the first 2 months, yet you have seen a decline. So if you could help us break down, are these gains back-ended? Where were you sort of rolled over some of the bulk in the last month? And then, of course -- the reason I'm asking is, of course, because then that can sustain going into 2Q, 3Q. So if you can spend some time on what has driven this cost of funds and cost of deposit gains? And second is also on the reported yield on advances have moved up, it seems by 2 basis points. Again, a small number, but anything to read? Any particular products that are -- again, what I'm looking at is the sustainability through the next 2, 3 quarters?

Yes. So basically, if you see on deposit side, I always remain very careful of what rate we are getting. So CASA -- we focus on a lot of CASA. And bulk also, I remain very careful. And let me tell you, borrowing -- I remain normally on the borrowing side. Borrowing, you get at around what rate [indiscernible]. And even if you have to raise bulk for 30 days, 60 days, that cost will be around at least 100, 150 basis points more than that. So I remain on the borrowing side, so that also helps. And bulk also we remain very careful. Bulk, if you see, bulk is at the same level as March. It has not gone up. INR 1.61 lakh crore was the March, INR 1.61 lakh crore is the June. So bulk, we have not increased. So that has actually helped. And when it was picking up like it was going 8% or it was going up -- CD going to 8%, bulk going to 7.7%, 7.8%, at that time, we were not in the market. So that has helped and partly it has also helped by the repricing. Maybe 1, 1.5 basis points that has also helped by the repricing. Similarly, on the advances side, advances also we remain very careful of the very thinly priced loans. We remain very sensitive on that. So wherever we get opportunity, either we exit or we get, I mean, better rate as compared to the last quarter. So when I give any quote for the WCDL or LOC -- what is full form of LOC? Line of credit. So whenever I give any rate, I always remain mindful that my cost of bulk has gone up by, say, 40 basis points, whether I'm able to pass it on or not. I remain mindful of that. So -- and LOC, line of credit, on a sequential basis, I have shed around INR 6,000 crores, which rate was very competitive. So hopefully, I mean, this trend should continue.

So this means you would be probably looking to deliver at the upper end of your margin guidance for this year? If I'm not wrong, it's around 3.15% to 3.25%?

Yes, yes, hopefully, hopefully. Because for margin expansion, there is no trigger now. Unless there is a rate increase, some import -- some repricing, but MCLR repricing and bulk deposit repricing will be compensated. MCLR also around 2 basis point impact will come in this quarter, negative. Similarly, bulk will be around 2 basis points or 3 basis points. So it will be compensated basically. So not seeing much margin compression -- I mean, expansion from here, but very rightly you told around upper band we can expect.

Sorry, again to double click, how are the rollovers in retail TDs? Are you facing competitive intensity going up there? Retail term deposits?

In between, it was, but not now. In between it was, when bulk was touching 7.8, 7.9 at that time, banks have started increasing their retail term deposit rate also, but not now.

Okay. Sir, I missed this part of the provisioning. If you have done any accelerated provisioning for ECL this quarter on standard assets, if you can call out that number? And second, if you now...

ECL, I have made INR 1,000 crores floating provision, straightway I have made.

In this quarter?

In this quarter, yes.

Okay. Okay. And sir, on ECL, what is -- now that you have had time to spend, how is the net -- I mean, if you can tell us the gross and the net impact both on steady-state RO -- credit cost because now you would have had a good time to spend with the new guidelines. So how does the new credit cost look?

Yes. So my expectation is my impact of ECL transitioning will be around INR 3,000 crores to INR 3,500 crores. Out of that, if you remember, I have told that around between INR 1,500 crores to INR 2,000 crores, I will try to make provision during the year. Out of that INR 1,000 crores, I have made. My endeavor will be to make another INR 1,000 crores -- during the year between INR 500 crores to INR 1,000 crores my endeavor will be to make that. So on the transition side, there is no impact, but the steady side, no impact. But flow, of course, there will be some impact on the credit cost. So credit cost, you can say it will be -- now standard provision is in the range of, say, for simplicity, you take around between 0.4% to 0.5%. And in ECL era, it will be around 1.5%. So 1% increase will be there on the standard. So whatever growth is coming, say I'm growing by 12%, then 1% of that means 12 basis point credit cost impact will be there on the flow basis. Net of tax may be around 9 to 10 basis points.

And sir, this is the net impact, right? Because you also release some -- released from Stage 3 provisions or NPA provisions, right?

No. No, no. Final guidelines has come where it is required that more provision on D3 and loss asset has to be maintained at 100% floor. That means bulk of the provision is lying in the D3 and loss asset. so, there will be hardly any release from there.

Okay. So basically, sir, 12 basis points...

Jayant, we have to move...

Congrats on the good quarter.

Jai, please unmute yourself and ask your question.

Congratulations on a steady number. Sir, I just was trying to understand -- I picked up on your TV interview wherein you had said that margins now have bottomed and ideally should go up. And just now, I think you said that you are looking to sort of looking at similar margins. Margins will not go down, but it may not go up also. So I just wanted to check, sir, what was the final verdict? How do you see...

No, no. Actually, see, Jai. When I said bottomed out, it is fact. See, now there is no trigger that it should go down unless rate of interest decreased. But at the same time, there is no trigger also that it should go up. Maybe marginal -- there also, I have told that it may -- expansion maybe by not much, maybe 2 basis points, 3 basis points.

Okay, understood.

Yes, yes.

And sir, we had already made 10% provision on SMA-1 and 2, right? So that provision you can use for ECL transition, right? That is one of the component for ECL transition. You are -- I mean, what is the gap in understanding? I thought that provision could also be used?

Yes, yes. We will be using that.

So apart from that INR 3,000 crores is the...

Yes, yes, whatever we have made, apart from that impact is around INR 3,000 crores.

Okay. Understood, sir. And sir, just lastly, have you also done IBPC in this quarter also, and the quantum...

No, no, no. Only INR 200 crores has gone, not much.

Okay, sir. And if you can quantify the total gold loan, sir. You have given the retail jewel loan, but the total, which is including agri and SME, the absolute rupees crore numbers?

Jewel loan total is INR 1.32 lakh crores.

That is the total number, right?

Total number, yes.

Next question we'll take from Ashlesh. Ashlesh, please unmute yourself.

Two quick questions from my side, sir. Firstly, in the market, now do you see any changes in the competitive environment, especially the pricing on home loans and corporate loans? So that is one. And second one, just to clarify on the cost of fund side, is there any more repricing of term deposits that is pending?

Yes, yes. So pricing side, yes, there is a lot of competition still. You see vehicle loan, home loan, corporate loan, particularly in good rated account and good PSUs, a lot of competition is there. So that remains. And cost of fund, you are asking on?

If any further repricing is pending on the deposits?