In the wake of the YES Bank crisis, deposits with private sector lender IndusInd Bank fell by about 10 per cent to 11 per cent, most of which were from government-related accounts. There could be some delinquency in unsecured loans due to the lockdown but the lender is confident of a recovery.

In an analyst call on Monday evening, the bank’s new Managing Director and CEO Sumant Kathpalia said that total deposits declined by 10 per cent to 11 per cent, of which almost two-thirds pertained to government-related accounts.

“It added premature withdrawals of term deposits were minimal while some were not rolled over. The bank also witnessed withdrawals from corporate deposits, though withdrawal from retail accounts was relatively lower. The bank replaced the withdrawal of deposits by longer-duration refinance / foreign exchange borrowings, bank CDs, excess SLR and call money,” said ICICI Securities in a noted, adding that the liquidity coverage ratio was maintained at about 112 per cent on a daily basis.

“We attended the conference call hosted by IndusInd Bank (IIB) where the management indicated slowdown in loan growth, comfortable liquidity position despite deposit outflows and possibility of deterioration in asset quality,” said ICICI Securities.

In a note on Tuesday, Emkay Global Financial Services said the bank’s institutional deposits ran-down post YES Bank saga, which were replaced with CDs/borrowings and will eventually be replaced with retail deposits

“The new Managing Director and CEO reiterated his long-term stance of retailisation of assets and liabilities, learning from its recent past,” it said.

Consumer banking

IndusInd Bank also told analysts that it plans to rebalance its book towards consumer banking, which should lead to margin/RoA expansion in the long run.

According to the note by Emkay, asset quality deterioration may accelerate due to lockdown. “The bank indicates that as of now, cards/PL, real estate and loan against property are showing early signs of disruption, while diamond (no NPA) and commercial vehicle portfolios are well-tested across cycles with higher customer vintage, and should bounce back as normalcy returns,” it said.

ICICI Securities said the lender guided that credit cost for the fourth quarter may be as high as 200-210 basis points due to accelerated provisioning on existing NPAs and incremental slippages. “The bank indicated that delinquencies in unsecured loans, such as PL and credit cards, may get elevated by 30 to 40 basis points, but is confident about recovery trends in microfinance when the lockdown is lifted,” it said.

It also said that loan growth may be contained for a couple of quarters and revive after that as the situation improves to eight per cent to 10 per cent next fiscal.

Kathpalia took over from Romesh Sobti as the MD and CEO of IndusInd Bank earlier this month. On Tuesday, the bank’s scrip fell 14.68 per cent and closed at ₹351.15 apiece on the BSE.

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