IndusInd Bank just reported a shocking 72% drop in net profit for the June quarter, falling to ₹604 crore from ₹2,171 crore a year earlier. The slump comes as the bank battles deteriorating asset quality and higher provisions, further complicating an already turbulent period for the lender. Analysts had expected a slightly better performance, with Bloomberg’s poll predicting ₹653 crore in net earnings. But the reality was far worse.
The bank’s troubles aren’t new. Earlier this year, it reported a record loss of ₹2,329 crore in the March quarter, driven by accounting irregularities in derivative trades. These issues left a gaping ₹2,000+ crore hole in the bank’s finances, setting the stage for the current challenges.
Adding to the uncertainty, IndusInd is still searching for a new CEO after the abrupt departure of Sumant Kathpalia in April. The bank confirmed that the new CEO’s name is pending regulatory approval from the Reserve Bank of India (RBI). Sunil Mehta, the bank’s chairman, assured investors that progress is being made. “The bank has made significant progress on the CEO appointment,” he said during an analyst call.
But leadership isn’t the only concern. IndusInd is also scrambling to fill other top roles, including two whole-time directors. “Wherever there are any open gaps, we are looking at both internal and external candidates,” Mehta added. The bank has also tightened its treasury operations and improved governance in its microfinance subsidiary to prevent further lapses.
The financial figures paint a grim picture. Net interest income dropped 14% year-on-year to ₹4,640 crore, while net interest margins narrowed to 3.46% from 4.25%. Provisions for bad loans surged 68% to ₹1,760 crore, reflecting worsening asset quality. Gross non-performing assets (NPAs) climbed to 3.64%, up from 2.02% a year ago, with net NPAs doubling to 1.12%.
Microfinance loans were the biggest culprit, with NPAs skyrocketing to 16.39% from 5.16% last year. The bank has cut its microfinance exposure from ₹40,000 crore to ₹28,000 crore, signaling cautious lending. Corporate clients aren’t faring much better, contributing to gross slippages of ₹2,567 crore in Q1.
Deposits and advances also saw a marginal decline, adding to the pressure. As of June 30, deposits stood at ₹3.97 lakh crore, barely changed from the previous year, while advances dipped to ₹3.33 lakh crore.
The road ahead looks challenging. With leadership in flux, asset quality deteriorating, and regulatory scrutiny intense, IndusInd Bank has a steep climb to regain stability. Investors will be watching closely—especially as the RBI’s decision on the new CEO looms.