Dear Shareholders,
In a year marked by significant global and domestic economic shifts,
IndusInd Bank has demonstrated steady performance and strategic growth, highlighted in the
Integrated Annual Report for FY2023-24.
The Bank has embraced digital transformation and leveraged emerging
technologies such as AI and machine learning to enhance operational efficiency, improve
customer experiences, and ensure robust regulatory compliance.
GLOBAL ECONOMIC HORIZON
The global economic and financial outlook showed significant
improvement over the second half of the year. Despite higher central bank rates, economic
activity remained resilient, supported by steady growth in employment and incomes. The US
and several large emerging markets outperformed initial estimates made at the start of the
year. In many economies, stronger-than-expected private consumption and
larger-than-expected government spending propelled growth.
The global economy confronts multiple challenges in 2024. Steep
inflation levels, tight monetary conditions, escalating geopolitical tensions, rising
geo-economic fragmentation, disruption in key shipping routes, high public debt burdens
and financial stability risks stand out amongst them. The year 2024 is also shaping up to
be the biggest-ever election year, with a record number of countries who've held and
will be holding elections, including pivotal elections in the US, France, EU, UK and of
course India. The outcomes of these elections could significantly impact global flow of
capital and goods with potential growing protectionism and inward-looking political
mandates in some economies.
HARNESSING EMERGING TECHNOLOGIES FOR SUSTAINABLE BANKING
The banking industry is undergoing a remarkable transformation, driven
by rapid technological advancements and evolving consumer expectations. The future of
banking lies in seamlessly embedding financial services into everyday life, adapting
swiftly to the fast-changing behaviors of customers.
Artificial Intelligence (AI) and Machine Learning (ML) are
revolutionizing banking operations by enabling robotic process automation, fraud
prevention, predictive analytics and regulatory compliance. Hyper-personalization has
become essential, driving the demand for data-backed financial services and product
recommendations. On these lines, I'm proud to say that IndusInd Bank's
revolutionary hyper-personalized financial super-app, INDIE' has completed one
year since its launch and has been witnessing encouraging response from the customers.
Banks are further leveraging Big Data to develop robust analytics, identify patterns and
create predictive models. The importance of cybersecurity and data protection has never
been greater. Banks are investing heavily in cybersecurity to safeguard customer data and
maintain trust, ensuring their systems are Scalability and cloud infrastructure are
pivotal for future-proo_ng banking operations. By building scalable cloud solutions, banks
can enhance economic efficiency and resilience. The shift towards an all-digital, mobile,
and cashless ecosystem is undeniable. Mobile banking usage has surged and this trend is
driving continuous innovation in banking, meeting the growing demand for convenience and
accessibility both in rural and urban markets.
AI's role in banking is transformative but must be adopted
responsibly. The finance sector stands to gain significantly from AI, but transparency,
fairness, and ethical considerations are absolutely crucial. All-in-all, the banking
industry is at the cusp of a technological revolution. Embracing AI,
hyper-personalization, Big Data and cybersecurity is essential to thrive in this new era.
The shift to a digital, mobile and cashless ecosystem signals a new world order in
banking, where innovation, adaptability and their ethical applications are key to success.
India and the New Global Order
Multiple disruptive technological and climate change trends threaten to
upend the world. Forces such as generative AI, decentralized finance, climate change and
its consequent implications including centering sustainable finance and gene
editing and other changes in biotech are causing transformative change at blinding speed.
They defy sovereign boundaries and sectoral silos. Each of these defy current regulatory
paradigms and require imaginative regulatory frameworks that balance facilitation
and regulation. There is an urgent need for a regulatory system that evolves with the
global economy to support sustainable and balanced growth. Regulators need to be ahead of
the curve to deal with leapfrogging technologies. Regulators are rapidly moving to green
finance, responsible investing and adopting ESG, requiring new international regulatory
paradigms.
India's increasing global stature, economic gravitas and
technological heft makes it a natural leader in pursuing an international alliance for
building a new global regulatory development institution. The New Global Order requires a
more contemporary global regulatory architecture and framework that takes economic
interests of a wider spectrum of nations including Global South. Building consensus in a
world marked by polarized divisions will not be easy. However, India has always shown the
grit and determination to accomplish most difficult tasks with ingenuity and integrity of
purpose. As India moves towards its rightful position to the third largest economic power
in the world, this leadership role on regulatory architecture will propel the momentum
towards this goal.
DOMESTIC ECONOMIC DEVELOPMENTS
Amidst the shifting global economic terrain, the Indian economy grew at
a robust pace in 2023-24, achieving an impressive annual average growth of 8.3% over the
past three years. India continues to hold its position as the fastest-growing major
economy in the world, reflecting in the rapid post-pandemic recovery. An upturn in the
investment cycle has bolstered this phase of growth, underpinned by persistent and robust
public sector capital expenditure, households' real estate investments and the
gradual resurgence of private corporate sector capacity. Exports of goods and services
grew, thanks to the resilient global growth and a turnaround in global trade, reducing the
external sector drag.
Bank credit growth remained strong, reflecting the improving economic
activity. Growth in non-food bank credit increased to 16.3% year-on-year as of March 2024,
up from 15.4% as of March 2023, driven by the services and retail sectors.
Alongside robust growth, macro-economic stability parameters improved
significantly. Headline CPI inflation eased despite multiple food price shocks. Current
account deficit narrowed, fiscal consolidation pace accelerated, and foreign exchange
reserves touched a record high. The Rupee exchange rate also remained largely stable.
India's Growth Outlook for the Near Future
Looking ahead, the outlook for growth remains promising. Domestic
conditions are pointing to an upward trend in real GDP growth from an average of 6% over
the previous decade. The recently presented Union Budget for 2024-25 has also laid out a
comprehensive roadmap to attain and sustain faster, inclusive and greener growth. The
budget puts thrust on capex and fiscal consolidation combined with supporting ongoing
recovery in rural demand. The initiatives, along with overall macroeconomic and price
stability, are aimed at crowding in private capex, which in turn will help improve
medium-term growth prospects and foster job creation in the economy. A push for next
generation of reforms and a comprehensive review of tax policy would set the stage for
achieving higher levels of growth on a sustainable basis, in an increasingly challenging
global economic environment.
We must, however, remain cognizant of the potential risks to growth.
Foremost among them are prolonged geopolitical tensions, extreme weather conditions, and
heightened financial market volatility as systemically important global central banks
carefully navigate the final stages of disinflation. Additionally, geo-economic
fragmentation and rising trade tensions, particularly concerning China's
manufacturing exports, pose significant challenges. Despite these potential headwinds,
India's strong external bu_ers, flexible exchange rate and overall macro-economic
stability are well-positioned to counteract any adverse global developments and help
sustain our growth trajectory.
INDUSIND BANK: POSITIONED TO CAPITALIZE ON INDIA'S GROWTH
Your Bank is well poised to contribute to India's economic growth
with its well-defined strategy and focused execution. The 3-year planning cycle strategies
serve as a comprehensive roadmap for the Bank's sustainable growth. During the year,
the Bank embarked on the Planning Cycle 6 (PC-6) strategy for the FY24 to FY26 period. The
PC-6 strategy remains pivoted on and strongly committed to Growth, Granularity &
Governance (i.e. 3G) focusing on key themes driving PC-6 strategy:
- Continuing the Retailization Journey
- Diversifying Domains
- Scaling Sub-Scale Businesses
- Accelerating Digital 2.0 and
- Imbibing ESG into all our Businesses
In the retailization journey, the Bank is focused on growing granular
businesses in loans as well as deposits and reducing concentrations from large customers.
The Bank is also working on diversification in areas of domain leadership such as vehicle
finance, microfinance and gems & jewelry wherein new growth boosters are built in to
complement existing strengths of the businesses. The Bank is investing in scaling some of
the sub-scale businesses with initiatives like enhancing MSME penetration, scaling home
loans, empowering merchants and strengthening affluent & non-resident Indian segments.
Our dedicated digital business unit, with its Digital 2.0 strategy, innovates relentlessly
to delivering innovative customer centric solutions and creating a profitable digital
bank. Sustainability, guided by ESG principles, defines our ethos. Responsible lending,
financial literacy and environmental consciousness are integral to your Bank's
philosophy of building highest ethical standards.
Overall, the PC-6 strategy is aligned towards the Bank's long term
goal of delivering High Quality Sustainable Growth'.
SHOWCASING THE BANK'S ROBUST PERFORMANCE
In FY24, your Bank exhibited robust traction across key business
metrics, successfully executing its planning cycle6 (PC-6) first year strategic
objectives. Financially, the Bank's balance sheet crossed the 5 lakh crore mark,
supported by deposits of 3,84,586 crores (a 14% y-o-y increase) and loans of 3,43,298
crores (an 18% y-o-y increase) as of March 2024. Consequently, the Bank's total
income (net of interest expense) stood at 30,012 crores, compared to 25,765 crores in
the previous year. Operating expenses were 14,148 crores, and pre-provision operating
profit rose to 15,864 crores. Net profit grew to 8,977 crores, marking a 21% y-o-y
increase. The return ratios remained healthy and consistent throughout the year, with
Return on Assets (RoA) and Return on Equity (RoE) close to 1.9% and 15%, respectively.
Over the last few years, your Bank has emerged as a stronger and more
focused institution, demonstrating remarkable resilience amidst a challenging macro
environment. As we move forward, the Bank remains steadfast in its commitment to
delivering healthy and sustainable Growth, Granularity and very strong Governance. Your
Bank stays committed to its Planning Cycle 6 plan of "Market Share with
Diversification". The Bank is continuously working on accelerating Digital
initiatives and delivering value to our esteemed customers. With the right strategies and
resources in place, your Bank is well-positioned to achieve its stated ambitions and
objectives.
ENVISAGING A BRIGHTER FUTURE
Your Bank continues to advance its Environmental, Social, and
Governance (ESG) impact across its business and operations. The Bank remains committed to
integrating sustainability into our business strategy, ensuring that our growth is both
responsible and inclusive. We have developed and implemented a robust CSR policy and
strategy that aligns with the global Sustainable Development Goals (SDGs) and National
Priorities. Our programs aim to impact communities at the grassroots level and elevate the
Human Development Index, ensuring a brighter future for all. Our strategic programs,
focused on three areas Water Stewardship, Inclusive Sports and Education and
Employability have positively impacted the lives of more than 5.5 lakh
beneficiaries across the nation. This year, the Bank has actively pursued opportunities to
expand our ESG-linked business across various business units to foster sustainability and
social equity. These include IndusWE, which supports women entrepreneurs; Indus Solar for
promoting solar rooftop installations for our MSE clients; and green, social, and
sustainability-linked loans for our corporate clients to assist them in their
decarbonization journey towards building a better and eco-friendly India.
Your Bank has developed a comprehensive strategy to achieve carbon
neutrality by 2032, converging social impact and environmental responsibility in its
business model. This reflects in our focus on sustainable investing and reducing carbon
footprint, transcending traditional corporate responsibility. Our CSR strategy aligns with
national development priorities and the United Nation's Sustainable Development Goals
for 2030, aiming to elevate the Human Development Index and ensure a brighter, inclusive
future for all.
Our dedication to fostering an inclusive environment, rooted in strong
core values and a clear sense of purpose, remains unwavering.
Employee Development and Talent Pool
Your Bank employees have once again demonstrated highest levels of
commitment in delivering exemplary performance to all stakeholders. IndusInd Bank has been
certified for the second consecutive year as a "Great Place to Work" by the
esteemed Great Place to Work Institute?, a global authority on assessing company culture
and people practices across various sectors and countries. This recognition underscores
your Bank's sincere efforts towards building a workplace that values diversity,
integrity, collaboration and highest ethical standards. Your Bank is committed towards
continuous development of competencies of the talent pool and making them future ready.
As we reflect on the past year, it fills me with immense pride to
witness the significant strides our Bank has made while navigating the evolving
macro-economic landscape. The integrated Annual Report will offer you deeper insights into
our achievements, progress, and future outlook.
I extend my heartfelt gratitude to our esteemed shareholders, loyal
customers, fellow Board colleagues, dedicated employees, regulators, and all other
stakeholders for their unwavering trust and support. Your belief and trust in us propels
our accomplishments, imposes more responsibility and inspires us to reach new heights.
Together, we look forward to a future brimming with shared success and prosperity for all.