IndusInd Bank Limited — Q4 FY25 earnings call

So Chintan, as we mentioned in the opening comments, on a going concern basis, for quarter 4, if we take out all the inter-head adjustments and one-offs etcetera, the net interest income would come to around Rs.4,700 crores. The non-interest income would come to around Rs.2,500 crores. The operating expenses would be around Rs.4,200-odd crores. So the operating profit would be around Rs.3,060 crores, is what we disclosed in the opening remarks.

Clarifies the adjusted financial baseline for NII and non-interest income after significant reclassifications and one-offs, crucial for future projections. Management was evasive on quantifying total fraud and a definitive timeline for full closure.

Asked by Chintan Joshi

So as the Chairman mentioned earlier, the financial impact of all the irregularities brought to the Board and the Bank's attention has been taken into the account, while we have prepared and disclosed these Q4 results. There is nothing that is outstanding today to our understanding. So one-off as such we have already taken for.

Management asserts that all identified one-offs and irregularities have been accounted for in the Q4 FY25 results, aiming for a clean slate. Soumitra Sen elaborated on the retailization of deposits strategy.

Asked by Harsh Wardhan Modi

There is around Rs.1,800 crores of loans, which were incorrectly classified into certain other categories, and that resulted into them being recognized as standard in more than 90 DPD days bucket. Those classifications have been rectified in this quarter... And the balance is Business as Usual slippages. It is also higher and that's what we have been discussing throughout the year. The slippages accumulated or the overdue book accumulated over the 9 months has turned into NPA in this quarter. So those 2 things are driving the microfinance slippages this quarter.

Provides a detailed breakdown of the Rs.3,509 crore microfinance slippages, distinguishing between Rs.1,800 crore due to reclassification of previously miscategorized loans and the remainder being business-as-usual slippages accumulated over 9 months.

Asked by Piran Engineer

The business as usual interest income is also being impacted because of the interest reversal which have happened on account of the elevated microfinance slippages apart from one-offs, during the quarter. So that has an impact. There is additional impact because of the events in March, we had to carry excess liquidity. That liquidity comes at a cost because you are deploying it in a lower-yielding assets. Thirdly, the loan mix change, because of the MFI being written off, the yield on the book have been depressed.

Explains the factors contributing to the lower-than-normal NII, including interest reversals from microfinance slippages, cost of carrying excess liquidity, and a depressed yield due to changes in loan mix. The corporate book reduction was a tactical move for liquidity.

Asked by Subhradeep Mitra

So there were certain items, which were from the beginning have been part of fee income, but wrongly classified under interest income. We have just reviewed the overall grouping and classification. And based on that, we have regrouped in the correct head. So as such, no impact on the P&L. But yes, the classification inside the P&L would change, and that's what we have done in Q4.

Seeks specific examples for the reclassification of Rs.761 crores from interest income to other income, which management offered to explain offline, indicating complexity.

Asked by M.B. Mahesh

As Chairman sir, had mentioned earlier that we will be cautious on microfinance segment. The approach of disbursements is towards the customers with long vintage, with better past payment record. These approaches will continue. The diversification into merchant advances continues.

Management confirms a cautious approach in microfinance, focusing on existing customers with good payment history and diversifying into merchant advances, rather than aggressive growth.

Asked by Piran Engineer

But having said that, as you know, the situation in some of the states is still evolving. There are a few elections in the next 12 months. So, we don't think the next year in microfinance will be back to normalcy. I think there should be a step down, obviously, given the higher number that we have reported for this year. There should be step down from the current quarter slippages, but it will still be elevated versus the business as usual. And then maybe in the second half of the year, you will see the things progressing back to normalcy. That's our base case today. But let's see how the MFIN guardrails, the state elections, some of the monsoon-related implications happen. So that's where we are. We are cautiously looking at this business, but normalcy maybe 6 months away.

Provides a specific, albeit conditional, timeline for microfinance business to return to normalcy, citing external factors like elections and monsoon.

Asked by M.B. Mahesh