Key Takeaways
- IndusInd Bank reported a ₹437 crore Q2 loss due to microfinance stress provisions
- The bank made accelerated provisions including a ₹1,940 crore MFI write-off
- Core net interest income fell 18% while deposits declined 6% year-on-year
- Asset quality showed marginal improvement with gross NPA ratio at 3.60%
Private sector lender IndusInd Bank swung to a ₹437 crore loss in the September 2025 quarter, reversing from a ₹1,331 crore profit a year earlier. The loss stems from the bank’s decision to proactively identify and provide for additional stress in its microfinance portfolio.
Accelerated Provisions and Write-offs
Newly-appointed CEO Rajiv Anand explained the bank opted for accelerated provisions during the quarter, including a substantial ₹1,940 crore write-off in the microfinance book. A senior official revealed the bank set aside ₹900 crore in additional provisions specifically for this move, with the remaining ₹2,631 crore representing routine provisions.
This comes after the bank booked a massive ₹2,329 crore loss in March amid governance and accounting issues.
Management’s Recovery Strategy
When questioned about potential future provisions impacting profits, Anand remained non-committal but emphasized continued balance sheet strengthening measures.
“There are enough levers with us to be able to grow. There is ample scope from a macro perspective as well. It is important for us to set the systems, controls and teams in place before we accelerate,” Mr. Anand stated.
Operational Overhaul and Accountability
The bank has established a project management group to oversee operational improvements, including strengthening systems, processes, and internal controls while minimizing manual accounting entries.
Accountability measures are being implemented, with disciplinary actions against erring officials planned over the next two quarters.
Financial Performance Metrics
The September quarter saw concerning financial indicators:
- Core net interest income declined 18% to ₹4,409 crore
- Loan book contracted by 9%
- Net interest margin compressed 0.76% to 3.32%
- Other income fell 24% to ₹1,651 crore
- Deposit base declined 6% year-on-year
Asset Quality and Capital Position
Gross slippages remained nearly flat at ₹2,537 crore compared to the previous quarter. The gross non-performing assets ratio improved marginally to 3.60%.
Capital adequacy remained strong at 17.10%, with the core buffer at 15.88%.
Future Business Focus
While remaining cautious on microfinance lending, the bank sees growth opportunities in its traditional vehicle finance and home loan segments, despite challenges from higher funding costs and corporate lending.
