IndusInd Bank (INDUSINDBK) Q2 25/26 earnings summary

Executive summary

• The quarter saw a net loss of INR 437 crores (Rs. 43,688 lakhs consolidated), driven by accelerated provisions and write-offs in the microfinance portfolio, despite stable core pre-provision operating profit and a strong capital base.

• Retail deposits remained steady, while wholesale deposits grew 3% QoQ; overall deposits declined 2% QoQ due to calibration of bulk sources.

• Digital transactions accounted for 93% of total, with strong growth in digital DIY assets and retail savings accounts.

• Leadership team strengthened with several key hires, including Rajiv Anand as MD & CEO and Viral Damania as CFO, with further additions expected.

• Strategic focus is on scaling MSME, traditional retail assets, and diversifying the portfolio for more granular and less volatile growth.

Financial highlights

• Net interest income for Q2 was INR 4,409 crores, down 18% YoY and 5% QoQ, impacted by lower microfinance loans.

• Net interest margin (NIM) was 3.32%, down 76 bps YoY and 14 bps QoQ, affected by lower asset yields and adverse loan mix.

• Operating profit declined 43% YoY and 20% QoQ; provisions and contingencies rose 45% YoY and 50% QoQ.

• Gross NPA and net NPA improved QoQ to 3.6% and 1.04%, with provision coverage ratio at 71.6%-72%.

• CET1 ratio stood at 15.88%, capital adequacy ratio at 17.10%, and LCR at 132%, indicating strong capital and liquidity positions.

Outlook and guidance

• Management aims to achieve 1% ROA in the medium term, leveraging diversification and cost optimization.

• Margins are expected to stabilize and improve as microfinance disbursements recover and portfolio mix is recalibrated.

• Fee to assets targeted at 1.5% over time, with growth expected from granular, franchise-driven sources.

• Focus on expanding branch network, retail customer acquisition, and scaling up affluent, NRI, and rural businesses.

• Board and management are focused on strengthening internal controls, minimizing manual entries, and enhancing oversight following identification of past discrepancies.