Image Source: Economic Times
IndusInd Bank has embarked on a robust recovery journey following significant challenges linked to legacy treasury and microfinance issues revealed in FY25. The Chairman of the bank emphasized decisive actions taken to address these long-standing problems, with the bank returning to profitability in the June quarter of 2025 and signaling strong future growth prospects.
Key Highlights of IndusInd Bank’s Treasury Resolution and Financial Recovery
The bank reported a consolidated net profit of Rs 604 crore in Q1 FY26, a significant turnaround from the historic loss of Rs 2,329 crore in the preceding quarter linked to mis-accounting related to internal derivative trades and microfinance challenges.
Chairman Sunil Mehta stated that the bank has stopped internal trading activities in its treasury book, a major step in rectifying the irregularities and restoring regulatory compliance.
The bank undertook a detailed cleanup of legacy bad loan recognitions and trading reversals that had severely impacted FY25 results.
Provision coverage remains stable at 70%, with provisions and contingencies reducing from Rs 2,522 crore in March 2025 to Rs 1,760 crore in June 2025, signifying improved asset quality.
Gross Non-Performing Assets (NPAs) increased slightly to 3.64% in June from 3.13% in March, while net NPAs rose to 1.12% from 0.95%, reflecting ongoing but manageable asset stress.
Operational and Strategic Measures for Sustainable Growth
The bank is scaling up collections and recoveries from non-performing loans, targeting an upgrade and recovery run-rate better than recent years.
Focused efforts to integrate retail, vehicle finance, microfinance, and corporate banking units under a “One IndusInd” franchise aim to leverage cross-selling, operational synergy, and risk diversification.
Deposit franchise showed resilience with retail deposits improving, and the bank strategically reduced high-cost certificates of deposit to granularize liabilities and reduce cost.
Deposits stood steady at Rs 3.97 trillion, with retail deposits comprising 46.5% of total deposits, up from 43.7% a year ago.
Conservative liquidity management strategies ensured an average liquidity coverage ratio of 141%, with surplus liquidity of about Rs 52,700 crore.
Financial Performance Snapshot
Net Interest Income declined 14% year-on-year to Rs 4,640 crore on a standalone basis, hurt by lower loan growth and elevated provisions for potential bad loans.
Net Interest Margin (NIM) stood at 3.46%, supported by lower cost of deposits and higher retail loan mix.
Non-interest income weakened to Rs 2,157 crore from Rs 2,442 crore, impacted by subdued corporate activities and microfinance disbursement.
Operating expenses remained stable with cost-to-income ratio elevated due to excess liquidity and seasonal factors, but management targets consistent reduction going forward.
Chairman’s Vision and CEO Succession Update
Sunil Mehta emphasized restoring stakeholder trust as a primary responsibility, highlighting transparent communication with regulators, rating agencies, employees, customers, and the media.
The bank remains confident in its prospective CEO appointment with regulatory approval expected soon, to lead the next phase of growth.
Focus areas for the new leadership will include accelerating loan book diversification with emphasis on secured retail loans such as home and MSME lending.
The chairman reaffirmed commitment toward operational excellence, cost management, and risk discipline to build a sustainable banking franchise.
Conclusion
IndusInd Bank’s decisive actions to resolve treasury legacy issues and strengthen asset quality have heralded a return to profitability, ending the turbulence of FY25. Strategic focus on granular deposits, retail expansion, and responsible lending positions the bank for resilient growth. Transparent stakeholder engagement and upcoming leadership changes inspire confidence in IndusInd’s sustainable journey forward.
Sources: Economic Times, New Indian Express
Advertisement
Advertisement
