IndusInd Q1 profit falls 72% on asset woes, higher provisions

Mumbai: IndusInd Bank, where a CEO hunt is on after the incumbent left following admission of record loss-inducing accounting gaps, reported a 72% on-year slump in June quarter net profit to ₹604 crore weighed by deteriorating asset quality and higher provisions. A poll of analysts by Bloomberg had pencilled in quarterly net earnings of ₹653 crore.

The lender had reported profits of ₹2,171 crore in the year-ago quarter. It had reported record losses of ₹2,329 crore in the March quarter, after accounting anomalies linked to the settlement of derivative trades over a protracted period punched a ₹2,000-crore-plus hole in the lender's business.

IndusInd Bank on Monday clarified that the name of the new CEO is under approval by the Reserve Bank of India (RBI) and that it was also looking for other senior executives.


"The bank has made significant progress on the CEO appointment," Sunil Mehta, the chairman of the board of directors, IndusInd Bank, said during the post-earnings analyst call. "The recommendations were submitted within the prescribed timeline and are currently under regulatory approval process."

The bank is also looking to appoint two whole-time directors on its board and replace a significant part of its leadership team that has either quit or is superannuating.

"Wherever there are any open gaps, we are looking at both internal and external candidates to fill them up," Mehta added. "In treasury, we have stopped internal deals. The governance framework for the microfinance subsidiary has been significantly improved bringing in greater transparency." After the exit of former CEO Sumant Kathpalia in April this year, the bank is currently being run by a committee of executives.

Net interest income was down 14% on year to ₹4,640 crore versus ₹5,408 crore in the corresponding period a year ago. Net interest margins were down 79 bps on year to 3.46% versus 4.25% a year ago. Provisions and contingencies shot up 68% on year to ₹1,760 crore in the June quarter versus ₹1,050 crore in the year-ago quarter. "During Q1, the board and the management have spent considerable time and effort towards resolving the concerns relating to legacy, treasury and microfinance issues as identified in the previous quarter," Mehta said.

Asset quality also deteriorated and rose 1.62% on year to 3.64% versus 2.02% in the year ago quarter. Net NPA was at 1.12% versus 0.60% in the year ago period.

Microfinance continued to be the biggest driver pushing up bad loans with NPA ratio shooting up to 16.39% versus 5.16% a year ago. From a peak of ₹40,000 crore microfinance loan book, the lender has shed the book to ₹28,000 crore, with the management also indicating they continue to be cautious on microfinance loans, along with exposures towards corporate clients. Gross slippages stood at ₹2,567 crore in June quarter versus ₹1,536 crore in same period a year ago.

Deposits as on June 30, 2025, were ₹3.97 lakh crore vs ₹3.98 lakh crore for June 30, 2024. Advances stood at ₹3.33 lakh crore versus ₹3.47 lakh crore in the same period a year ago.