Indusind Q3 net profit drops 90% on MFI stress, aims for system-level growth in FY27

Mumbai: IndusInd Bank on Friday reported a sharp 90 per cent year-on-year fall in net profit to Rs 127.98 crore for the December quarter, impacted by higher stress in its microfinance portfolio and a contraction in its loan book under the new management. The lender had reported a loss of Rs 437 crore in September quarter.

Managing Director and Chief Executive Rajiv Anand said the bank has begun “right-sizing” its balance sheet by shedding inefficient assets and high-cost liabilities such as bulk deposits, with growth expected to align with the system from FY27. Net interest income declined 13 per cent to Rs 4,562 crore, reflecting a 13 per cent fall in advances. The loan book shrank 13 per cent year-on-year and 3 per cent sequentially.

Net interest margin improved by 17 basis points to 3.52 per cent, aided by interest on an income tax refund. Excluding this one-off, margins stood at 3.35 per cent. Anand said the bank is confident of sustaining margins despite expected RBI rate cuts.

Asset quality stress was largely concentrated in microfinance and vehicle finance. Fresh slippages rose to Rs 2,560 crore, including Rs 1,022 crore from micro loans and Rs 691 crore from vehicle finance. The gross non-performing assets ratio improved marginally to 3.56 per cent quarter-on-quarter, though it remained higher than the year-ago level. Write-offs increased to Rs 2,612 crore, while provisions rose to Rs 2,096 crore.

Chief Financial Officer Viral Damania said the shift to expected credit loss-based provisioning could impact 1.3–1.7 per cent of the bank’s advances. The microfinance book declined sharply to Rs 17,669 crore, while the wholesale book contracted 28 per cent, with the bank pivoting towards higher-yielding SME loans. Capital adequacy stood at 16.94 per cent, with no immediate fundraising plans. The bank also named former SBI MD Arijit Basu as additional director and part-time chairman.