At the outset I hope you and your family are taking due care and aresafe during these testing times. India has been through one of the most stringentlockdowns in the world. The country is however opening up in a calibrated manner sinceMay. IndusInd Bank as an organisation responded exceedingly well amidst the crisis withbranches contact centres ATMs remaining fully operational and catering to the financialneeds of our customers. We continue to monitor the situation and shall take all possiblesteps to safeguard the valued interests of our customers and our employees. I am confidentthat over the next few quarters India will develop a "new normal" and as aBank we will drive value by being responsive to our stakeholders through convenient andsimple banking.
It's been over 100 days since I took on my new role as the MD and CEOof IndusInd Bank and consider myself extremely privileged to have been a part of thisinstitution since 2008. The Bank has been on a journey of growth with profitability andtoday we have truly transformed into a universal bank respected and looked up to for ourinnovative sophisticated and robust customer solutions on our "best-in-class"banking platforms. In my 12 years of service with IndusInd Bank I am proud of what wehave achieved as an organisation always staying firmly committed to the strong values andthe rich legacy that we have. A legacy that spans over 25 years of commitment to ourcustomers. As a part of the overarching
strategy of the Bank the management team and I will focus on"sustainability" as a theme to drive long-term stakeholder value.
The Bank successfully completed the merger with Bharat FinancialInclusion Limited (BFIL) on July 4 2019 following all the requisite approvals. Themerger serves two very important criteria (1) being a change agent for financial inclusionas BFIL has nearly 8 million women customers mainly in rural villages where we help createlivelihoods by financing their "Kirana" stores providing livestock financingand cottage industry loans to name a few and (2) delivering growth and profitability tothe Bank by providing wider banking services like savings and recurring depositspayments basic consumer durable loans to hitherto unbanked or under-banked persons.
As you are aware in the recent past the financial markets havewitnessed extreme volatility owing to the COVID-19 outbreak and challenging financialmarkets. Stock prices turned volatile and this fuelled unwarranted market speculationincluding the share price of your Bank. This period may have been a cause of concern toyou. I would like to assure you that IndusInd Bank remains financially strongwell-capitalised and liquid. To demonstrate our financial soundness you will be awarethat the Bank sought and obtained approval from shareholders as recently as August 252020 to raise Rs.3288 crores from marque investors and the Bank's Promoter throughpreferential issuances of equity shares.
Next I would like to come to the financial highlights for the year:
FY20 witnessed a healthy growth in top line with revenues up 31%and operating profit up by 34%.
Net interest income grew 36% and fees 24%. NIM improved a good34 bps from 3.80% to 4.14%.
The Bank maintained liquidity as measured by Liquidity CoverageRatio in the 110% - 120% range well in excess of minimum regulatory requirements. We havebolstered our liquidity position even further in the current financial yearFY21.
We slowed our balance sheet growth due to COVID-19 towards theend of the financial year resulting in 11% YoY loan growth.
Our Retail business grew faster with the Retail to Corporate mixat the year-end being 56%:44%.
Our provisions during the year were higher than our usualrun-rate as we increased our provision coverage ratio (PCR)
from 43% to 63% during the year and fully provided for a large infragroup NPA. We also made prudent provisions for COVID-19.
Our Profit After Tax grew by 35% to Rs.4442 crores despitetaking higher provisions. Our ROA was 1.6% and a year-end capital adequacy maintained at15.04%.
It is gratifying to see our work acknowledged and rewarded at variousreputed forums and platforms. We were honoured with:
'Best Bank Award' in the mid-sized bank category at the 24thedition of the Business Today - Money Today Financial Awards.
Best use of IT and Data Analytics for Business Outcome &Best Payment Initiative amongst Private Sector Banks at the IBA Best Technology BankAwards.
Spirit of Innovation Award for the launch of IndusCorp Duo& Nexxt Credit Cards and Data Warehouse & Power BI Implementation Projects at the8th Edition of the Finnoviti 2020 Conference & Awards.
The Bank also recorded the highest growth in brand value amongstglobal banks according to The Banker's Top 500 Banking Brands 2020 Report.
The Bank is deeply embedded in the communities and plays an importantrole through its Corporate Social Responsibilities. We are proud of the ecosystem wesupport and a few of these initiatives include:
Setting up of 177 mini health clinics across 20 backwarddistricts.
Nurturing 40 girl athletes to provide them with high-performancetraining and coaching in the field of Hockey as well as supporting the development of over55 young athletes to make them champions in the disciplines of wrestling athletics andfield hockey.
The Bank also pledged its support to the Government in itseffort to combat the COVID-19 pandemic by supplying relief materials such as face maskshand sanitisers and gloves to the affected areas and also facilitated Personal ProtectiveEquipment (PPE) for medical officials on duty.
The Bank has seen a good turnaround since the management change in2008. I think there is still a long growth runway for us and I am committed to improvingthe quantity and quality of our earnings. I believe character of any organisation isevident in the troubled times. I think the Bank has shown strong resilience facing heavyheadwinds in the last 3-4 months. We have braved these out and the only way hereon is up.I am confident that together we can make it happen.
Since the outbreak of global pandemic and "CountrywideLockdown" that began in last week of March the digital business and innovationaround the product offerings has assumed centre stage. Your Bank has taken the lead inlaunching various digital initiatives to remain agile responsive and competitive inproviding ease of operations to its customers without moving out of their homes. Theintroduction of digital video-based KYC (vKYC) by your Bank which provides an alternate toin-person KYC process has been widely accepted. The opening of a bank account placing ofdeposits and conducting operations through internet banking has become simplified in a bigway. Besides Bank is gearing up to move internal efficiency parameters on digitalofferings through revamped business models using digitisation as a backbone. I am sure youwill witness further new innovations to cater to the rapid changes taking place to addressto the 'New normal' behavioural pattern emerging post COVID-19.
I would like to thank the regulatory authorities and agencies for theirconstant support. My sincere appreciation to my colleagues and members of the Board forguiding and supporting the management team in its endeavours. The Bank has an extremelystrong franchise of 25 million customers served by over 30000 employees today and I wouldlike to acknowledge the support of our customers and our highly committed and capableworkforce.
Managing Director & CEO