IndusInd Bank Ltd

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.

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.

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.

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.

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.

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.

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'.

In FY24, your Bank exhibited robust traction across key business metrics, successfully executing its planning cycle–6 (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.

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.

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.