Earnings Call Transcript Analysis Report #
Financial Performance #
Key Metrics #
- Pre-Provisioning Operating Profit (PPoP): INR 1,079 crores, up ~25% YoY and 10.6% QoQ. PPoP to average assets improved to 1.0% (from 0.9% YoY & QoQ).
- Net Profit: Fifth consecutive quarter of sequential expansion.
- Net Interest Margin (NIM): 2.4%, flat QoQ and YoY. Management noted Q3 as an “important quarter of inflection” due to RIDF reduction late in the quarter.
- Deposits: Total Deposits at ~INR 2.77 lakh crores, up ~14.6% YoY. CASA + Retail TDs (< INR 3 cr) at 62.6% of Total Deposits.
- CASA: CASA ratio improved by ~350 bps over the last 4 quarters. Average daily SA balances +32% YoY, CA balances +22.1% YoY. Blended SA cost stable around 5.8-5.9%.
- Fee Income: INR 1,512 crores, up 26.6% YoY and 7.5% QoQ. Fee Income to Total Assets at 1.5% (up 20 bps over 8 quarters).
- Operating Expenses (Opex): INR 2,657 crores, up 13.2% YoY and 0.9% QoQ.
- Cost to Income Ratio: Improved for the second successive quarter. Expected to improve further.
- Advances: Up 4.1% QoQ and 12.6% YoY. SME & Mid-Corporate growth >25% YoY. Retail Advances flat QoQ, down ~3% YoY due to recalibration.
- Asset Quality: Net NPA + Net Carrying Value of Security Receipts (SR) / Advances at 0.6%. Net SR carrying value at INR 233 crores.
- Recoveries & Resolutions: INR 1,843 crores in Q3 FY25; INR 4,400+ crores in 9M FY25.
- Provision Coverage Ratio (PCR): ~71%. Management comfortable maintaining this level.
- Capital Adequacy: CET1 at 13.3%, minimal consumption over 9 months.
Comparison #
PPoP showed strong sequential and YoY growth. NIM remained flat despite RIDF reduction (timing effect) and strong CASA growth, indicating pressure from deposit costs/yields. Fee income growth robust. Deposit growth strong YoY, particularly CASA. Advances growth moderate, driven by Wholesale, while Retail was deliberately slowed. Asset quality metrics stable/improving.
Guidance/Forecasts #
- On track for INR 5,000 crores Recoveries & Resolutions guidance for FY25.
- Net SR carrying value expected to be negligible/NIL by end of FY25.
- Future recoveries from the written-down SR pool expected (~INR 1,200 cr/year, ~INR 3,000 cr total over time).
- Credit Cost: Indicated a potential range around 30 bps of total assets going forward (below the earlier stated <50 bps comfort level), though explicitly stated “this is not a guidance”.
- RIDF target: Below 5% of assets over the next 2-3 years.
- NIM: Expect improvement going forward, especially from next FY, driven by RIDF impact and retail recalibration.
Growth/Decline Areas #
Growth strong in PPoP, Fees, CASA, SME/Mid-Corp loans. Decline in RIDF balances, Net SR value. Flat NIM. Deliberate slowdown/slight decline in Retail loans. Stabilizing trend noted in Retail slippages (except microfinance).
Strategic Initiatives & Business Updates #
Major Strategy #
Continued focus on profitability roadmap (Margin, Fee improvement; Cost reduction; SR recovery). Maintain Retail/Wholesale advances mix around 60:40. Focus on profitable growth, even if overall pace moderates. Leverage branches as core business hubs.
New Products/Services #
Launched “IRIS Biz” (all-in-one business super app). Good traction noted in “YES PAY NEXT” (retail UPI) and “YES PAY B