The Road Ahead !

Edelweiss Investor Conference

February 8, 2017
Presentation Agenda

1. Banking Industry Operating Environment Forecast

2. IndusInd Bank Planning Cycle 3 Current Status

3. A Glimpse into Planning Cycle 4

4. Select FAQs

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Banking Industry Operating Environment Forecast
Banking Operating Environment

Benign to bullish environment driven by:

1. Interest rates forecasts

2. Credit growth scenario

3. Loan book quality

4. Sectoral competition

4
IndusInd Bank Planning Cycle 3(PC 3)
Market Share with Profitability
(2014-2017)
PC 3: Strategy
Planning Cycle 3 (201417)

Strategy Market Share with Profitability

Theme Domain Leadership and Specialisation

New Yield & Fee Boosters

Focus on

Scaling Up Client Base

Density in Branch Network

Growth in Business As Usual

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PC 3: Themes

Domain
Diversify
Leadership

Vehicle Finance New Retail Products

Home Markets Offshore Banking Unit

Gems & Jewellery Tractor Finance

Differentiate

Market and Client

Segmentation

Investment Banking

Innovative Customer
Offerings
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PC 3: Outcomes
Planning Cycle 3 (201417)

9M FY17 Outcome

Loan Growth 25% - 30% 25%

CASA Growth CASA > 35% 37%

Resulting in

Fee Growth To Exceed Loan Growth 24%

Branch Network To Double from 602 1,075

Customer Base To Double On track

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PC3: Sustaining Top Quartile Vectors
Net Interest Margin (NIM) RoA RoE*

4.00% QIP & Pref.

3.81% Allot.
3.71% 1.81% 1.90% 1.91% 1.88% 18.59%
3.65% Rs 5,081 crs
17.48%
16.78%
15.72%

FY14 FY15 FY16 Q3 FY17 FY14 FY15 FY16 Q3 FY17 FY14 FY15 FY16 Q3 FY17
*on average equity

Cost /Income Net NPA Revenue / Employee (Rs. Lacs)

40
0.39%
48% 0.36%
47% 47% 47% 0.33% 34 34
0.31% 31

FY14 FY15 FY16 Q3 FY17 FY14 FY15 FY16 Q3 FY17 FY14 FY15 FY16 Q3 FY17

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A Glimpse into Planning Cycle 4 (PC4)
Key Drivers for Planning Cycle 4 (PC4)

2. Rural Banking Led by

1. Rebalancing of Loan Book
Microfinance

3. Digitization &
Client Experience

4. Internal Collaboration
5. Productivity Gains
and Cross Sell

Each Driver A Booster to Business As Usual

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 1. Rebalancing of Loan Book

Loan Mix Q3 FY17 Loan Mix 2020 Ambition

1. Loan Against Property
2. Business Banking
Non-Vehicle 3. Credit Cards
Retail *, 17% 4. Personal Loans
Non-Vehicle 5. Commercial Cards
Retail * 6. Loan Against Shares
25% 7. Rural Loans
8. Gold Loans
Corporate 9. Business Loans
Corporate Banking 10. Loan Against Card
Banking, 51% 50% Receivables

Vehicle
Retail, 32% Vehicle Retail
25%

* Includes Business Banking

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2. Rural Banking Led by Microfinance

Agri Business Group

Agriculture value chain
Inclusive Banking Commodity financing Rural Branches
Corporate Agri-finance Savings Accounts, PMJDY
Group
Loan Against Rural Property
Microfinance lending via
Vehicle Finance Loans
Business Correspondents
Remittances, DBT
Lending to Microfinance Insurance
NBFC MFIs
Portfolio assignments and
securitization

Rural Banking
Vehicle Finance
Vertical

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3. Digital Strategy
An integrated Digital Strategy can extract significant value via:

1. Agility & Innovation as Service Differentiator

2. Operating Efficiency in Front & Back Office

3. Evolution to Online and Digital Channels

4. Partnering with the Digital Ecosystems

5. Improved Decision Making & Analytics

6. Transformation to Online Offerings

7. Re-skilling Staff on Digital Technologies

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3. Digital Execution

Digital Bank: Building Blocks for the 360 degree Transformation

Digital Sales & Channel Data Process Re- Product Client

Marketing Innovation Analytics Design Development Experience

Social Media & Micro- Real Time Client Analyzed Pricing

Biometric led Geo & Trigger
Search Engine segmentation of On-boarding / for effective Reln
ATMs, POS, Mobile based Offers
Marketing clients Product X-sell Mgmt

Online Leads & Mobile as Remote Predictive Alternate Lending

Control for All Digital Documents AI led Client
Sales via Fin. Analytics for X-sell Models basis
Txns Flow & Txn STPI Engagement
Portals / Attrition Mgmt Digital Surrogates

API Banking for Trigger based Digital Customer New Age Payment X-Channel
Omni Channel
Corporates Fraud and Risk Servicing & solns: BBPS / AEPS Transaction
Campaign Mgmt.
Management Complaints Mgmt UPI / Blockchain Fulfilment

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3. Doing Business in the Digital World
SME / Institutional Retail / HNI FI / Rural

From Push to
Pull based Comprehensive Merchant
Customer PAYMENT Mobile based New Age Payment Aadhaar based Benefits
SOLNs: Acquiring & Disbursement solutions around BBPS & UPI Transfer, Remittance
Approach
Solutions And Merchant Transactions
+
From Distribution
to Partnership DIGITAL Digi Loans on Card Receivables Online Personal Finance Micro Deposits Insurance
based PRODUCTS: Management and Real time products via USSD / Biometric
E-Tendering & Transit Solutions
Business Credit facility

From In-house to
+
Outsourced
Back-Office

STRATEGIC
PARTNERSHIPS:

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4. Internal Collaboration & Cross Sell
Large & Growing Customer Base, Now Over 9mn !

Vehicle Customers
(Stock >3mn;
Flow >1mn)

Microfinance Retail Liabilities

Customers Customers
(Stock >1.2mn (Stock >5mn
Flow >0.5mn) Flow >1mn)

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Note: Bubbles not to scale
4. Internal Collaboration & Cross Sell

Cross Sell to be 6x of Current Run-rates

Key Products:
700
Vehicle loans Personal Loans
600 KCC
Loan Against Property
500 Business Banking
Kisan Credit Cards
400
Personal Loans
300
Loan Against Property

Savings Account 200

Vehicle Loans
Micro-insurance 100

Remittances -
FY17 FY20

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5. Productivity Gains Branch Resizing
Rapidly changing retail banking industry with evolving customer preferences

Declining physical transaction volume at branches and prodigious growth in mobile usage

Branch expansion in PC-4 will reflect these changes with leaner structures supported by digital delivery

Comparison of current and proposed branch layouts (excluding rural) is provided below:

Average Branch Size Average Branch Staff Average Branch Costs

100 100 100

- 20% - 36%
80
- 48%
64
52

Current PC-4 Current PC-4 Current PC-4

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5. Productivity Gains Optimizing Organizational Structures
Branch Org. Structure - Existing Branch Org. Structure - New

Branch Branch
Manager Manager

Sales Service Sales Service

Product RMs Product RMs
Manager Manager Manager Manager

Feet on Feet on Service

Service
Street Street Delivery

Operations

Staff redeployed towards new growth !

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Select FAQs
1. What is the impact of Demonetization ?

Part of wider multi purpose drive, short term collateral damage

No debate on long term benefit

High cash segments hit relatively harder

Huge move towards digitization bankable market to expand

IndusInd strategy to refocus towards business early has paid off

Expectation of higher deposit retention, cross sell of wealth products

Longer term encroachment into some areas played by NBFCs

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2. Are IBLs Funding Sources Diversified?
Other Liabilities; 5%
Net Worth; 12%
Other Borrowings; 5%

Refinance; 7%

CA Deposits; 11%
Capital Markets TD; 3%

Corporate TD; 4%

Financial Institutions TD;

10%
SA Deposits; 15%

Public Sector Units TD;

12%
Retail & SME TD; 17%

As a % of Total Balance Sheet as of Dec 2016 23

3. Why is IBL not a Conglomerate ?
Life Insurance General Insurance Health Insurance Mortgage and Broking

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4. What are IBLs Sustainability Initiatives ?
Environmental Social Governance

River Rejuvenation, Satara (MH): Pre & Post Legal Literacy for Women Borrowers
Board Level CSR Committee

6 Years of Sustainability Reporting

Participation in CDP, DJSI Surveys

Environmental Lending Policy

Health & Sanitation Drives in Rural India Winner of CNBC Asia Corporate
Social Responsibility Award

http://www.indusind.com/content/csr-home.html

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5. What is IBLs Acquisition Strategy ?
Specialist and differentiated businesses

Existing proven leadership & team

Un-penetrated customer base

Complementary distribution, capability, product or service

Good asset quality

Accretive to financial metrics in Year 1

Ability to scale with profitability

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6. How is IBL Planning CEO Succession ?

Institutionalized talent since the management change happened in 2008

Deep bench strength Succession plans in place for all the key positions including the MD & CEO

Leaders evolve with experience and guidance ; very few are born leaders

The Bank has a well-knit culture where thought and action are consistent across the organization

Leadership planning attracts the highest attention of the Board; ESOPs play a big role.

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Thank You