IndusInd Bank has managed to show a colossal improvement in its performance over the past two years. The bank has again moved back to track after struggling for quite some time with bad loans. The improvement in performance by the bank can be very easily visualised from its asset quality and margins.

Two years ago the bank was having a tough time owing to high non performing assets (NPAs) which formed more than 3% of the gross advances of the bank. The gross NPA level of the bank has now come down to 1.2%. The net interest margin (NIM) of the bank rose to 3.2% in the quarter to March 2010 from 1.6% in the March 2008 quarter.

A NIM of 3% is considered good in the banking industry and only few banks are able to maintain this NIM.

The current and savings account (CASA) deposits formed 23.7% of the total deposits at the end of March 2010 quarter. The bank has managed to maintain a NIM of 3% without having to compromise on higher proportion of CASA. This is an indicative that the bank would be able to manage a NIM of more than 3%.

This seems achievable as the bank's loan portfolio consists of 40% of consumer finance such as commercial vehicle loans, two-and-three-wheeler loans and car loans.

The bank is rapidly growing its non-fund-based income, too. The core free income of the bank rose by 44% in the MArch 2010 quarter.

The loan book of the bank has grown by 30% in FY'10 which is double the industry rate. With the high trend of growth in the loan book as well as the margins, the bank is expected to grow its bottomline at much higher rates.