Merger ride: IndusInd vehicle loans up 80% in first half

The vehicle loan portfolio of IndusInd Bank jumped up 80 per cent to Rs 1,800 crore in the first half of 2004-05 from Rs 1,000 crore at the end of 2003-04, when the merger of Ashok Leyland Finance (ALF) with the bank became effective.

The rise in commercial vehicle, car and two-wheeler loans has increased the retail assets share in total assets to 60 per cent from 50 per cent at the beginning of the year. The retail assets constituted just five per cent of the total assets prior to the merger.

"The significant growth in vehicle loan assets was made possible by the domain knowledge of the merged ALF and the comfortable capital adequacy ratio (CAR) of the bank," IndusInd Bank joint managing director S Nagarajan said.

The CAR of the merged entity as on March 31, 2004, was 12.75 per cent against 12.13 per cent a year earlier. The merger had catapulted IndusInd to be a leader in vehicle financing. The wholesale banking business of IndusInd grew by 15 per cent in April-September 2004. The bank expected the growth pace to continue in the second half of 2004-05.

IndusInd expects a 30 per cent rise in vehicle loans and a 20 per cent growth in corporate advances in 2005-06. Nagarajan said the bank is contemplating a tier-II bond issue to meet its capital adequacy needs, but the size of the issue and other details are yet to be discussed.

The bank is in the process of converting 52 of ALF's offices into its branches, which will take its total branch strength to 135 by February 2005.

It has sought the Reserve Bank of India's (RBI) permission to convert another 80 offices of ALF into its branches.

IndusInd is spending about Rs 25 crore on technology and other infrastructure required to convert the 52 ALF offices into branches. It will also be recruiting about 150 people and plans to recruit another 550 to its staff strength when the RBI permission to convert the second lot of ALF offices into branches comes through.

Nagarajan said the geographically enlarged network will increase the bank's potential to leverage customer relationships with a range of financial products. The asset base of the bank at the end of September 2004 stood at Rs 14,000 crore.