IndusInd Bank Q3FY26 Concall Update
(Nirmal Bang Retail Research)
# Management reiterated a medium-term ROA target of ~1%, to be driven by a lower cost of funds via higher retail deposits, a shift toward higher-yielding assets (vehicle finance, MFI, SME), growth in fee income, cost efficiencies, and lower credit costs.
# Management outlined a gradual growth strategy, with FY26–FY27 growth broadly in line with the industry, market-share gains in FY27–FY28, and dominance in select focus segments by FY28–FY29.
Outlook: Neutral
Key Financial Highlights:
* Advances declined 13% YoY and 2.6% QoQ, driven by runoff in microfinance loans and selective trimming in wholesale banking. Deposits were down 1% QoQ, entirely due to a reduction in bulk deposits.
* NIM came in at 3.52% (vs 3.32% QoQ), including a 17 bps benefit from interest on income-tax refunds and a one-off interest recovery; normalized NIM stood at 3.35%. Margin improvement was led by a declining cost of funds from term-deposit repricing, partly offset by an adverse loan mix due to further microfinance book degrowth.
* Opex came at Rs. 3,999 cr, including a one-off Rs. 230 cr impact from labor code implementation.
* Gross NPA was 3.56% and Net NPA 1.04%; management aims to bring Net NPA below 1% over time (targeting the 60–70 bps range), though no fixed timeline was provided.
* PCR stood at 72% and is expected to rebuild gradually as slippages normalize and write-offs decline gradually. LCR came at 122%.
Business Segment Performance:
Vehicle Finance reported disbursements of Rs. 12,900 cr (+26% QoQ) and a loan book of Rs. 98,196 cr (+2% QoQ), driven by MHCVs, tractors, and passenger vehicles. Asset quality has improved YoY, with FY26 slippages expected to be better than FY25; management expects a supportive demand environment aided by fiscal and policy measures.
Microfinance (BFIL) disbursements were Rs. 3,598 cr, while the book declined to Rs. 17,669 cr (–17% QoQ) due to contractual run-off. CGFMU guarantee coverage is expected to rise to ~38% of the standard book. 31–90 DPD in MFI declined to 2.4% in Dec’25 (vs 3.2% in Sep’25).
Consumer Banking (Retail Assets) reported total assets of Rs. 31,057 cr (+18% YoY), led by strong growth in home loans at Rs. 6,114 cr (+94% YoY; +10% QoQ). Personal loans were stable at Rs. 10,598 cr (+12% YoY), while credit card loans declined to Rs. 10,264 cr (–6% YoY), with spends of Rs. 16,318 cr.
Rural & Priority Banking saw merchant loans rise to Rs. 7,338 cr (+16% YoY; 5.79 lakh borrowers), affordable housing loans increase to Rs. 2,692 cr (+25% YoY), and Kisan Credit and other rural loans remain stable QoQ at Rs. 4,267 cr. The segment continues to diversify beyond MFI while supporting PSL obligations.
SME Banking reported a portfolio of Rs. 43,957 cr.
Wholesale Banking loans declined 5% QoQ, while portfolio quality remained healthy, with 82% of customers rated A-and-above.
* Management indicated no immediate need for growth capital over the next 12–18 months. The expected transition to the ECL framework is estimated to impact ~1.5%–1.7% of the loan book (pre-tax).
