The current credit cost guidance is intact for the lender and will remain within the range of 110-130 basis points, says Sumant Kathpalia, Managing Director and CEO of IndusInd Bank. While talking exclusively to CNBC-TV18 on Tuesday, January 23, he noted that the credit cost has decreased from 157 to 119 basis points, aligning well with the guidance.
Kathpalia further said that even during quarters with elevated gross flows, the credit cost remains within the targeted range. "The gross flows are expected to range between ₹1,100 to ₹1,300 crore," he added.
A significant portion of the gross flows is attributed to the vehicle finance segment, which is well-diversified across six categories.
IndusInd Bank has consistently maintained a net interest margin between 4.2% to 4.3%, according to Kathpalia.
The IndusInd Bank CEO attributed this stability to strategic levers, including a mix change between corporate and retail, and within retail, a diversification across microfinance, vehicle finance, and other assets.
For the third quarter, the NIM stood at 4.29%, unchanged from the preceding September quarter.
Addressing the microfinance business, Kathpalia said that despite a 20% CAGR in the joint liability group book, credit cost will remain within the range of 2.5% to 3%.
Highlighting the diversification within the vehicle finance portfolio, Kathpalia mentioned a well-diversified ₹87,000 crore book spread across six categories. The bank's capital position was deemed strong, with internal accruals anticipated to meet growth requirements.
He specifically mentioned a credit cost reduction in the vehicle finance book, from 1.3% to an estimated 1.18% by year-end.
Looking ahead, Kathpalia mentioned that the bank is well-capitalised presently, and internal accruals should suffice for the immediate future. The capital position will be re-evaluated to determine any future capital requirements.
Kathpalia was speaking to CNBC-TV18 days after the lender reported around 17.3% rise in net profit to reach ₹2,297.9 crore for the October–December quarter, compared to ₹1,959.2 crore in the same period last year.
The lender's Net Interest Income (NII) registered growth of 17.8% year-on-year to reach ₹5,295.7 crore.
(Edited by : C H Unnikrishnan)
First Published: Jan 23, 2024 2:47 PM IST
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