Summary
Indian Bank - Q3 FY26 Earnings Call Summary Thursday, January 22, 2026 5:00 PM
Event Participants
Executives 5 Ashutosh Choudhury (Executive Director), Binod Kumar (MD & CEO), Brajesh Kumar Singh (Executive Director), Mini T M (Executive Director), Shiv Bajrang Singh (Executive Director)
Analysts 6 Anand Dama (Emkay Global), Antariksha (Analyst), Ashok Ajmera (Analyst), Darshil (Analyst), Jai Mundhra (Analyst), Parth Gutka (Analyst)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹7.91 lakh crores | +12.62% YoY; Retail granular focus remains high amid industry-wide liquidity tightening. |
| CASA Deposits | ₹2.96 lakh crores | +9.86% YoY; Driven by 22 state government fintech tie-ups and focus on salary accounts. |
| Global Advances | ₹6.39 lakh crores | +14.24% YoY; Growth led by RAM segment (+16.65%) and Retail (+18.54%). |
| GNPA | 2.23% | Improved from 2.45% YoY; Management guided for sub-2.00% levels. |
| NNPA | 0.15% | Historic low; PCR remains robust at 98.28%. |
| Net Interest Income | ₹6,896 crores | +7.5% YoY and +5.27% QoQ; Supported by sequential NIM expansion. |
| Domestic NIM | 3.40% | +6 bps QoQ from 3.34%; Outperforming original guidance of 3.10%-3.30%. |
| Operating Profit | ₹5,024 crores | +5.79% YoY; Crossed the ₹5,000 crore milestone for the first time. |
| Net Profit | ₹3,061 crores | +7.33% YoY; Highest recorded post-tax profit in 10 quarters. |
| CRAR | 16.58% | Healthy capital position; CET1 at 14.54% with no immediate equity dilution planned. |
| CD Ratio | 80.77% | Managed via IBPC sales of ₹7,000 crores during the quarter to optimize balance sheet. |
Geographic & Segment Commentary
- RAM (Retail, Agri, MSME): This segment grew by 16.65% YoY to ₹3.90 lakh crores, now representing 61% of the total loan book. Retail specifically led the group with 18.54% growth, while MSME grew 16.41% to reach ₹1.05 lakh crores.
- Corporate: Grew 8.16% YoY reaching ₹2.01 lakh crores with a strong pipeline of ₹50,000 crores. Focus remains on green finance (EV, solar), which grew 60%, and the logistics/warehousing sector.
- Digital Banking: Digital business footprint reached ₹1.98 lakh crores in 9M FY26, a 66% YoY growth. Management aims to increase the share of digital business from 15% today to 50% over the next 2-3 years.
Company-Specific & Strategic Commentary
- Balance Sheet De-risking: Sold ₹7,000 crores of IBPC (Inter-Bank Participation Certificates) this quarter to manage the CD ratio and support NII through interest savings of approx. ₹140 crores.
- CASA Initiatives: Launched five new products garnering ₹1,500 crores; focus on 22 state government departments for SNA/Non-SNA accounts has increased average savings balances from ₹26,000 to ₹36,000.
- Digital Scaling: Investing ₹2,000 crores annually in IT (Capex/Opex); successfully migrated to cloud and launched 147 digital journeys, with 94% of transactions now occurring through digital channels.
- Prudential Provisioning: Increased additional provision on SMA-1 accounts from 5% to 10% (₹380 crore impact this quarter) to cushion the balance sheet ahead of ECL transition.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Credit Growth | 12% - 13% for FY26 | Management prefers moderate, high-quality growth over aggressive risk-taking. |
| NIM | 3.35% - 3.40% for Q4 FY26 | Expecting 1-2 bps impact from rate cuts and MCLR repricing, partially offset by deposit resets. |
| GNPA | < 2.00% by FY26 end | Backed by a strong recovery pipeline of ₹5,500 - ₹6,500 crores for the full year. |
| ROA | ~1.30% for FY26 | Currently at 1.32% for 9M FY26; management confident of staying above the 1.20% guidance. |
| Total Business | ₹25 lakh crores by Dec 2029 | Strategic long-term goal to double the current business size in five years. |
Risks & Constraints
| Risk | Context |
|---|---|
| Deposit Mobilization | System-wide liquidity tightness is driving bulk deposit rates up (6.7%-6.8%); management admits a structural shift in consumer behavior toward capital markets may pressure CASA. |
| ECL Impact | Transition to Expected Credit Loss (ECL) remains a variable; high LGD requirements (65%) and 100% PD on restructured assets could necessitate significant front-ended provisioning. |
| Asset Quality Seasonality | Management noted March typically sees higher slippages due to audit-related MOCs (Memorandum of Changes), which may temporarily elevate NPA levels. |
Q&A Highlights
Asset Quality & SMA
- Question: Why did SMA-2 increase significantly this quarter? (Ashok Ajmera)
- Answer: The spike to ₹4,309 crore includes two PSU accounts (₹3,000 crore) with state government guarantees that fluctuate between SMA buckets; actual slippage risk remains low (Binod Kumar).
ECL Preparedness
- Question: What is the timeline and quantum for ECL transition? (Ashok Ajmera/Jai Mundhra)
- Answer: The bank will not take the full 5-year permitted window for absorption; the goal is to absorb the impact within one year (FY27). Current excess provisioning on SMA is a strategic cushion (Binod Kumar).
Margins and Repricing
- Question: Will NIMs stay at these elevated levels of 3.45%? (Darshil)
- Answer: 37% of the MCLR book and 18% of deposits reprice in Q4. Expect marginal 1-2 bps pressure due to the lag in deposit rate cuts vs. immediate loan yield impact (Binod Kumar).
IBPC Transactions
- Question: What was the impact of the ₹7,000 crore IBPC sale? (Jai Mundhra)
- Answer: The sale helped manage the CD ratio and resulted in roughly ₹140 crores of interest savings (Shiv Bajrang Singh).
Key Takeaway
Indian Bank delivered a robust Q3 FY26, characterized by record operating profits of ₹5,024 crores and a historic low NNPA of 0.15%. Growth was balanced with the RAM segment expanding at 16.65%, while the Corporate book was strategically managed through ₹7,000 crores of IBPC sales to maintain a healthy CD ratio of 80.77%. Management demonstrated a conservative risk posture by doubling provisions on SMA-1 accounts to 10% and maintaining a high PCR of 98.28%. Despite industry-wide headwinds in deposit mobilization and rising bulk rates (6.7%-6.8%), the bank expanded its NIM to 3.40% and maintained a superior ROA of 1.30%. Strategically, the bank is pivoting toward a 50% digital business mix and has set an ambitious target to double its total business to ₹25 lakh crores by 2029. While Q4 may see minor margin compression from rate resets, the bank’s strong capital adequacy (16.58%) and credit pipeline (₹50,000 crores) position it well for sustained profitability in FY27.
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