Key Highlights

• In IIB, concerns around asset quality have dominated gains in its core business momentum. We are enthused by the bank’s performance, and believe IIB getting through the current crisis without major earnings erosion has been a better-than expected outcome.
• The bank highlighted that collection efficiency is getting better, and normalising much ahead of estimates. The quarter will see restructuring on MFI and vehicle finance crystallising.
• Management maintained its stance of continued strengthening of balance sheet. This will provide and earmark provisions (from already existing buffer) towards telecom account (exposure of INR34bn, of which INR10bn is fund-based).
• After a soft Q1FY22, wherein loan offtake got impacted on mobility restriction, business momentum is gaining traction. The bank expects balanced loan growth, essentially driven by corporate in the near term and retail segment over the medium term.
• Within retail, disbursement trends has already reached pre-covid levels in all products (ex-CV, which is expected to normalise in Q4FY22). The bank has delivered on deposit momentum and expects that deposit growth (supported by retail term deposits) will translate into loan growth.
• 40% of the overall business sitting in Vehicle Finance and MFI. In Car and 2W book – market seems to have come back to pre-covid level as transportation has moved from mass to personal. In MFI, bank has been reducing exposure in areas of West Bengal, Assam and is doing MFI restructuring only in areas where accessibility is a problem.