IndusInd Bank is banking on its commercial vehicle and microfinance portfolios to drive recovery as the lender navigates past accounting challenges and leadership changes. Managing Director and CEO Rajiv Anand outlined the bank's strategic focus during the post-December quarter earnings call, expressing confidence in the new leadership team's ability to restore growth momentum.

Loan Portfolio Performance

The bank's loan book performance during the December quarter showed mixed results across different segments:

"We are seeing that incremental disbursals on our microfinance book are behaving much better than what we have seen in the very recent past," Anand said. The CEO expressed optimism that both growth and slippages in the microfinance business will improve significantly from current levels.

Strategic Focus Areas

The bank is concentrating on several key areas to drive future growth:

• Commercial Vehicle Finance: Continues to be a steady performer with 5% year-on-year growth
• Microfinance Recovery: Incremental disbursements showing better repayment behavior
• MSME Segment: Expected to strengthen and support fee income growth
• Retail Liability Franchise: Focus on granular deposits over bulk deposits

Anand highlighted that disbursements remained robust in vehicle finance, retail, and granular corporate lending despite the overall decline in average advances.

Deposit and Liability Strategy

On the liability side, deposits fell 4% year-on-year and 1% quarterly to ₹3.93 trillion. The bank is implementing a strategic shift toward retail deposits:

"Our intent is to grow in line with the market on both assets and liabilities in 2026-27, and as we think about granulizing our liabilities, the intent is to grow our liability franchise faster than our bulk deposits," Anand explained. This strategy aims to reduce funding costs and build a less volatile asset base.

Financial Targets and Capital Position

The bank has set ambitious targets for the coming period:

• Return on Assets: 1% on exit basis over next 12-18 months
• Growth Alignment: Match system-level growth in 2026-27
• Capital Adequacy: Remains comfortable for near-term growth

Management is investing significant resources in strengthening the retail liability business through organizational changes, process improvements, and enhanced branch-level productivity.

Regulatory Matters

Addressing regulatory concerns, Anand clarified that the Serious Fraud Investigation Office probe focuses on certain past and present officials rather than the bank itself. Additionally, an audit qualification at subsidiary Bharat Financial Inclusion relates to legacy issues, with financial impacts already provided for in previous years.

IndusInd Bank has reported stable asset quality trends across its core business operations, with encouraging developments in its microfinance segment. The bank's performance indicates resilient operational management and effective risk control measures across its primary business verticals.

Core Business Performance

The bank's core businesses have demonstrated stable asset quality trends, reflecting consistent operational performance and robust risk management frameworks. This stability across the primary business segments suggests effective credit monitoring and portfolio management practices.

Microfinance Segment Recovery

While the core businesses maintained stability, the microfinance segment has shown early signs of recovery. This development is particularly noteworthy given the challenges this segment has faced in recent periods. The early recovery indicators suggest potential improvement in asset quality metrics for this business vertical.

Asset Quality Overview

The contrasting performance between the stable core businesses and the recovering microfinance segment highlights the bank's diversified business approach and its ability to manage different portfolio segments effectively. The stable asset quality trends across core operations provide a solid foundation, while the early recovery signs in microfinance offer potential for future improvement in overall portfolio performance.