IndusInd Bank Swings to Loss on Higher Microfinance Provisions

IndusInd Bank Ltd. slipped into the red in the September quarter as higher provisions on microfinance loans hit its bottom line, reversing the recovery seen in the previous quarter.

The lender reported a net loss of ₹4.45 billion for the quarter ended September, compared with a net profit of ₹6.84 billion in the June quarter.

Managing Director and Chief Operating Officer Rajiv Anand said asset quality remained stable across core businesses except in microfinance, where the industry is facing cyclical pressure. The bank accelerated write-offs and increased provisions in that segment as a “prudent measure,” he said.

Provisions rose 44% on year and 51% on quarter to ₹26.22 billion. Write-offs surged to ₹25.17 billion in July–September from ₹6.64 billion a quarter ago, while recoveries were steady at ₹2.44 billion.

Net interest income fell 17.5% on year to ₹44.09 billion, weighed down by a decline in advances. The bank’s net interest margin slipped to 3.32% from 3.46% a quarter ago and 4.08% a year earlier.

Advances dropped 9% on year and 2% on quarter to ₹3.26 trillion, while deposits declined 6% on year and 2% sequentially to ₹3.90 trillion, partly due to the bank forgoing wholesale deposits.

Gross non-performing assets stood at 3.60% of gross advances as of Sept. 30, compared with 3.64% a quarter earlier. Net NPAs improved to 1.04% from 1.12%.

The capital adequacy ratio under Basel III norms was 17.10%, and the provision coverage ratio rose to 72% from 70%. Liquidity coverage stood at 132%, down from 141% a quarter ago.

For the half-year ended September, net profit dropped sharply to ₹2.39 billion from ₹34.78 billion a year earlier, while total income fell over 7% to ₹276.77 billion.