IndusInd Bank: A River Of Bounty

In the past three years, IndusInd Bank has gone from being a story of lost opportunity for one of the country's first ‘new' private sector banks to a remarkable success story. Many attribute the success to the advent of Romesh Sobti as its CEO. Sobti turned what was a family-retainer-run bank of the Hinduja family into a professionally managed, cutting-edge financial services entity.

The stock value has appreciated nearly nine times from 31 March 2009 to 31 March 2012, while the benchmark index Nifty 50 returned about 75 per cent in that period.

Romesh Sobti, CEO, IndusInd Bank (BW Pic by SUbhabrata Das)

What's more remarkable is the nature of its profitability. In the past five years, the bank has invested as others cut costs. The cost-to-assets ratio went up from 1.8 per cent to 2.6 per cent from FY08 to FY12. Better yet, this was more than offset by a better income-to-assets ratio, from 2.6 per cent to 5.1 per cent: every basis point increase in cost-to-assets generated a 4 basis point-increase in income-to-assets ratio.

IndusInd bank has a strong presence in vehicle finance, and a stable and growing fixed-rate home loan book. It plans to go from 365 branches (as of December 2011) to 700 branches by the end of FY14. Like the Indus, it flows from strength to strength.

(This story was published in Businessworld Issue Dated 28-05-2012)