18th Annual General Meeting - July 17, 2012

- Address by Mr. R. Seshasayee, Chairman 

Ladies and Gentlemen,

On behalf of my Board colleagues and all employees of IndusInd Bank, I welcome you to our Annual General Meeting today.

I am especially pleased that so many of you - shareholders, shareholders’ representatives, representatives of the media and distinguished guests - have come for the meeting. I consider this as a sign of your interest in, and your close association with, the Bank.

Your keen interest in the Bank has always been an honour and a source of motivation to us, and I take this opportunity to thank you for this.

The Directors’ Report, the Auditors’ Report and the Audited Accounts for the year ended March 31, 2012 have been with you for some time now. With your permission, I shall take them as read.

Mr. Romesh Sobti, Managing Director will share with you, in a brief presentation, the highlights of the Bank’s performance during the year 2011-12, and the business trends during the first quarter of the current year.

The last year saw the financial markets strongly influenced by political developments and thus prone to higher volatility. The global economy was impacted by a range of negative factors in 2011: rising commodity prices, unyielding inflation, downgrades by rating agencies and the sovereign debt crisis in the Euro zone. All of this led to a great deal of uncertainty in the markets and considerably dampened consumer and business sentiment.

Global macroeconomic conditions have since shown signs of modest improvement.

In the US, GDP growth accelerated to 3.0 per cent in Q4 of 2011, and consumer spending has shown signs of improvement. While the unemployment rate has been trending down, concerns remain about the sustainability of this trend.

The immediate pressures on the financial markets in the Euro area have been alleviated to a large extent by the European Central Bank injecting liquidity of more than one trillion Euros through long-term refinancing operations. However, a sustainable solution to the Euro zone debt problem is yet to emerge. The fiscal correction necessitated by the large public debt levels, tightening of credit conditions and persistently high unemployment have added to the downward pressure on the economic activity in the Euro zone.

The state of the domestic economy is a matter of continuing concern. Though inflation has moderated in recent months, it remains sticky and above the regulator’s tolerance level, even as growth has slowed.

Significantly, these trends are occurring in a situation in which concerns over the fiscal deficit, the current account deficit and deteriorating asset quality loom large. In this context, the challenge for monetary policy is to maintain its vigil on controlling inflation while being sensitive to risks to growth and other vulnerabilities.

GDP growth moderated to 6.1 per cent during Q3 from 6.9 per cent in Q2 and 8.3 per cent in the corresponding quarter of 2010-11. This was mainly due to moderation in industrial growth from 2.8 per cent in Q2 to 0.8 per cent in Q3 even as the services sector held up relatively well.

Going forward into 2012-13, assuming a normal monsoon, agricultural growth could stay close to the trend level. Industry is expected to perform better than in last year as leading indicators of industry suggest a turnaround in IIP growth. The global outlook also looks slightly better than expected earlier. Overall, the domestic growth outlook for the current year appears a little better than in 2011-12. Accordingly, the baseline GDP growth for 2012-13 has been projected at 7.3 per cent.

Although global commodity prices have shown signs of moderating, it is too early to downgrade this as a risk factor. Thus, while the regulators continue with their anti-inflationary stance, the extent of policy action needs to balance the adverse movements in inflation with recent global developments and their likely impact on the domestic growth trajectory. I am happy to inform you that IndusInd Bank moved forward during the year by decisively adapting to meet the challenges of the new daunting environment, while clearly enhancing its competitive position.

During the year, while augmenting the Bank’s profitability and health, heavy investments have been made in the future.

The Bank is focusing on client-driven products and services, and these have been received well.

In the pursuit of the catch slogan of 3-2-1, i.e., to be number 1 in RoA, RoE and NIM; raise 2-fold the Profits, Clients and Branches; the period taken to achieve the same being 3 years, the focus of the Bank is to grow faster than the market, with the underlying target of achieving rising market share across the various product lines.

The Bank has significantly improved its asset quality, has sharpened its risk management capabilities, put in place enabling systems and procedures, scaled up its international banking operations, has increasingly made use of technology to deepen customer relationships while upgrading internal controls and improved the efficiency of its operations and back offices.

The Bank is well capitalized, with CRAR under Basel II at 13.85% as at March 31, 2012 as against the regulatory minimum of 9%.

Between 2008 and today, the Bank has been transformed into a robust and profitable institution that could hold its own through the inclement period last year.

The Bank was adjudged the Winner of “India’s Best Mid-sized Bank Award 2011” in the ‘Businessworld-PWC Best Banks Survey’ and the Winner of “India’s Best Mid-sized Bank Award 2011” in the ‘Business Today- KPMG Best Banks Survey’.

In the long term, an institution can remain successful if it inculcates an approach that is focussed on both performance and values, and a sense of responsibility. The Bank is an integral part of society, and it is truly important to us to contribute to solving the problems facing society today, also because this is in our own best interests.

The Bank assumes social responsibility by supporting numerous socially worthwhile projects, the details of which are mentioned in our Corporate Social Responsibility (CSR) Report. The money we spend on our CSR programme is important, but what is equally important is the voluntary commitment of our staff towards it.

The Bank received various awards during the year for its Solar-powered ATM project, which included the CII Environmental Best Practices Award 2012 for the “Most Innovative Project” and the NASSCOM IT User Award for the Horizontal category of Environmental Sustainability.

Acknowledgements

Before I conclude, I would like to thank all the shareholders of the Bank for their unstinted support.

On behalf of the Board and on my own behalf, I would also like to express our very special gratitude to all our customers for reposing their faith in the Bank.

I would also like to take this opportunity to commend and appreciate the dedication and the commitment of the staff members of the Bank, who have amply demonstrated their passion to perform.

Let me also extend my sincere thanks to all our business partners, for their continued support and co-operation.

I wish to place on record our gratitude to the Reserve Bank of India, the Securities and Exchange Board of India and to the other regulatory authorities, for their valuable guidance and support.

Last but by no means the least, I offer my personal thanks to each one of you for taking time off from your busy schedules to attend this Annual General Meeting, and for giving me this opportunity to meet you in person.

Thank You.