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Informist, Wednesday, May 21, 2025

 

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--IndusInd Bank Jan-Mar net loss INR 22.36 bln 
--Eleven analysts saw IndusInd Bank Jan-Mar net loss INR 4.12 bln 
--IndusInd Bank Jan-Mar net loss INR 22.36 bln vs profit INR 23.47 bln yr ago 
--IndusInd Bank Jan-Mar total income INR 113.43 bln vs 146.99 bln yr ago
--IndusInd Bank FY25 net profit INR 26.43 bln vs INR 89.50 bln year ago 
--IndusInd Bank FY25 total income INR 563.52 bln vs INR 551.36 bln yr ago 
--IndusInd Bank gross NPA ratio 3.13% Mar 31 vs 2.25% qtr ago, 1.92% yr ago 
--IndusInd Bank net NPA ratio 0.95% Mar 31 vs 0.68% qtr ago, 0.57% yr ago 
--IndusInd Bank Jan-Mar provisions INR 24.17 bln vs INR 8.99 bln year ago 
--IndusInd Bank Basel III capital adequacy ratio 16.24% as on Mar 31
--IndusInd Bank Jan-Mar net interest income INR 30.48 bln, down 43% on year 
--IndusInd Bank: Jan-Mar net interest margin 2.25%, down 168 bps on quarter 
--IndusInd Bank advances INR 3.45 tln as on Mar 31, up 1% on yr 
--IndusInd Bank deposits INR 4.11 tln as on Mar 31, up 7% on yr
--IndusInd Bank: Provided INR 17.91 bln for misclassified loans in Jan-Mar 
--IndusInd Bank Jan-Mar fresh slippages INR 50.14 bln vs INR 22.00 bln qtr ago 
--IndusInd Bank Jan-Mar recoveries, upgrades INR 5.27 bln vs INR 4.80 bln qtr ago 
--IndusInd Bank wrote off loans worth INR 18.16 bln Jan-Mar 
--IndusInd Bank current, savings account ratio 32.8% as on Mar 31 
--IndusInd Bank Jan-Mar average liquidity coverage ratio 118% 
--IndusInd Bank: INR 1 bln interest payment on borrowing not recognised in past 
--IndusInd Bank: Fincl impact of wrong regulatory submissions unascertainable
--IndusInd Bank: Suspect fraud against the bank, involvement of employees 
--IndusInd Bank: INR 1.73 bln misreported as microfin fee income Apr-Dec FY25 
--IndusInd Bank: Misreported microfin fee income INR 1.73 bln reversed Jan-Mar 
--IndusInd Bank: Board directed necessary legal steps 
--IndusInd Bank: To take legal steps against staff involved in microfin fraud 

 

By Aaryan Khanna

 

NEW DELHI – In its first results after widespread accounting faults were discovered, IndusInd Bank Ltd. reported a net loss for the March quarter that was far greater than analyst estimates. This is also the first quarterly loss the bank has posted, as per data going back to Jan-Mar 2011.

The private-sector lender said its net loss for the March quarter was INR 22.36 billion, against a profit of INR 23.47 billion a year ago. The average estimate of 11 analysts who had expected a loss came to INR 4.12 billion. Seven other analysts had projected a profit.

 

The bank's total income came down by 22.8% on year to INR 113.43 billion in the March quarter, with a major decrease in both interest earned and other income. Meanwhile, expenses rose nearly 11% on year to INR 118.15 billion. While the operating loss was limited, provisions of the bank nearly tripled from a year ago to INR 24.17 billion, leading to a sharp net loss.

 

The provisions included INR 17.91 billion for microfinance loans misclassified as standard assets and on which interest income had accrued, the bank said. The reversal of interest income on these loans was a loss of INR l.78 billion. The bank also determined that INR 1.73 billion in Apr-Dec was incorrectly recorded as fee income in the microfinance business. This was fully reversed in the March quarter accounting, the bank said.

 

In another release, IndusInd Bank said its board suspected some employees with a significant role in accounting and financial reporting of committing fraud against the bank. The board has directed appropriate action against such employees under applicable laws, the bank said.

 

IndusInd Bank wrote off INR 19.60 billion as a prior period item from its internal trades derivatives accounting as notional profit since the financial year 2015-16 (Apr-Mar). In March, the bank said an internal review had found certain discrepancies in the accounts of its derivatives portfolio. The review had estimated an adverse impact of about 2.35% of the bank's net worth of INR 651.02 billion as on Dec. 31. In April, after an independent audit, the bank said the accounting hit from these trades had been estimated at INR 19.79 billion, and it would be "appropriately" reflected in the statements for FY25. The segment results showed a loss of INR 14.57 billion on account of treasury operations in the reporting quarter.

 

Sumant Kathpalia, managing director and chief executive officer of the bank, and Arun Khurana, deputy chief executive officer, resigned after the lapses surfaced. Recently, the Reserve Bank of India approved IndusInd Bank's request to let it constitute a committee of executives to perform the chief executive's role until a permanent appointment is made.

 

"The Bank has appropriately accounted for and reflected the impact while finalizing the results for the Quarter/ Twelve Month ended March 31, 2025," IndusInd Bank said in a press release. "The Bank's financials now reflect full and fair representation of all the concerns brought to its attention."  

 

The bank said the financial impact of incorrect regulatory disclosures could not be ascertained. Other rectifications include an interest payment of INR 1 billion on certain borrowing instruments not recognised on profit and loss in prior years. IndusInd Bank also reclassified INR 7.61 billion from interest income to other income and INR 1.58 billion from non-tax provisions to other operating expenses in the results for FY25, it said.

 

For the financial year, the bank's net profit shrank over 70% on year to INR 26.43 billion. Its total income inched up by 2.2% on year to INR 563.52 billion.

 

Despite the corrections, the bank's Basel III capital adequacy ratio was well above regulatory minimum at 16.24%. It has also maintained an average liquidity coverage ratio of 118% in the March quarter, and further enhanced it to 139% in the June quarter so far.

 

At the end of the March quarter, the bank's asset quality declined even as its loan book shrank sequentially. Gross non-performing asset ratio rose to 3.13% from 2.25% a quarter ago and 1.92% a year ago. The net NPA ratio was 0.95%, up from 0.68% on Dec. 31 and 0.57% a year ago. The provision coverage ratio was consistent at 70%, the bank said.

 

Fresh slippages among non-performing assets were at INR 50.14 billion in the March quarter, nearly all coming from the consumer loan book. Recoveries and upgrades totalling INR 5.27 billion in the reporting quarter from INR 4.80 billion a quarter ago. Write-offs nearly doubled on year to INR 18.16 billion in the March quarter.

 

The net interest income for the reporting quarter tanked 43% on year and 42% sequentially to INR 30.48 billion. Margins also took a beating, with the net interest margin down to 2.25%, down 168 bps from the December quarter and 201 bps from a year ago. 

 

With the bank's reputation taking a hit due to the skeletons in the accounting closet, total advances fell 6% on quarter to INR 3.45 trillion on Mar. 31, though it was still marginally up on year. The deposit franchise was flat on quarter, but grew 7% on year to INR 4.11 trillion. Of these, current account saving account balances fell 7% on year, with the ratio of such low-cost deposits to the total deposits shrinking to 32.8% on Mar. 31 from 35% a quarter ago.

 

IndusInd Bank reported its earnings after market hours. On Wednesday, the bank's shares fell 1.6% to INR 769.95 on the National Stock Exchange.  End 

 

Edited by Rajeev Pai and Deepshikha Bhardwaj

 

 

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