IndusInd Bank Q3 Profit Plunges 90% To ₹128 Crore Amid MFI Stress, Loan Book Shrinkage

Mumbai: Private sector lender IndusInd Bank on Friday reported a 90 per cent drop in its December quarter net profit to Rs 127.98 crore, as it witnessed higher stress in the microfinance book and degrew loan book under the new management. The Hinduja group-promoted bank, which has had a challenging few quarters that saw the discovery of fraud and ensuing change in top leadership, had reported a loss of Rs 437 crore in the preceding September quarter.

The bank has begun a "right-sizing" of its balance sheet, which involves shedding inefficient assets and expensive liabilities such as bulk deposits, its managing director and chief executive Rajiv Anand said, adding that it aims to grow in line with the system in FY27. The core net interest income dropped 13 per cent to Rs 4,562 crore on the back of a 13 per cent de-growth in advances.

The bank's loan-book de-grew 13 per cent on-year and 3 per cent on-quarter, and the net interest margin widened by 0.17 per cent to 3.52 per cent. The bank management attributed the widening in NIMs to interest on income tax refund and added that, excluding the one-off, the number stood at 3.35 per cent. Anand exuded confidence of maintaining the NIMs going forward as well, despite the rate cuts from RBI.

On the asset quality front, Anand attributed a bulk of the stress to MFI loans and vehicle finance, but added that the newer MFI loans disbursed after taking precautionary measures on the portfolio a few months ago and getting the loans covered under a government's credit guarantee scheme will help in future. The fresh slippages came at Rs 2,560 crore as against Rs 2,200 crore in the year-ago period, and included Rs 1,022 crore of the micro loans and Rs 691 crore in vehicle finance.

The gross non-performing assets ratio improved on-quarter to 3.56 per cent as against 3.60 per cent, but was higher than the 2.25 per cent in December 2025, while the write-offs jumped to Rs 2,612 crore from Rs 983 crore. The overall provisions increased to Rs 2,096 crore from Rs 1,744 crore in the year-ago period. The bank's chief financial officer Viral Damania said the bank will have to take an impact of 1.3-1.7 per cent of the Rs 3.17 lakh crore in advances as the system migrates to expected credit loss-based system of provisioning.

The micro loans book declined 46 per cent on-year and 17 per cent on-quarter to Rs 17,669 crore, and Anand said going forward he expects the book to grow. The bank's wholesale book also de-grew 28 per cent on-year, and Anand said that the bank is shifting to prefer the better-yielding small and medium enterprises advances segment from the large corporate exposures. Anand said going ahead, the bank does not find any challenges in growing its advances and will grow the book in line with the system in FY27, but added that deposit growth is a challenge.

The bank will be focusing on garnering retail liabilities going ahead, the new CEO said, adding that this is occupying largest part of his time. Anand said the bank, which has made a slew of leadership appointments since he took over, will appoint a head of retail banking, and chiefs for technology and risk by end of March this year. On the capitalisation front, the bank's overall adequacy stood at 16.94 per cent as of December 31, 2025, and Anand said there are no fundraising plans in the immediate future.

Meanwhile, the bank announced the appointment of former managing director of SBI, Arijit Basu, as an additional director and part-time chairman to succeed Sunil Mehta, whose term ends on January 30. Indusind Bank shares closed 1.04 per cent down at Rs 893.10 a piece on the BSE on Friday, as against a 0.94 per cent correction on the benchmark.

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