IndusInd Bank reports surprise Q2 loss as provisions surge, asset quality stabilises

IndusInd Bank reported a net loss of ₹444.8 crore for the September quarter, missing expectations of a ₹309 crore profit, compared with a profit of ₹1,325.5 crore in Q2 FY25.

The bank’s net interest income (NII) declined 17.5% YoY to ₹4,409.3 crore, from ₹5,347 crore a year ago, while fee and other income fell to ₹1,651 crore from ₹2,185 crore in Q2 FY25. Net interest margin (NIM) dropped to 3.32% in Q2 FY26 from 4.08% in Q2 FY25.

Yield on assets stood at 8.75%, down from 9.58%, and cost of funds slightly improved to 5.43% from 5.54%.

Asset quality showed modest improvement, with gross NPA at ₹12,057.8 crore (3.60%) and net NPA at ₹3,399.4 crore (1.04%) versus 3.64% and 1.12% in the previous quarter. Provision Coverage Ratio (PCR) rose to 71.81% from 70.13% in Q1 FY26.

Provisions surged to ₹2,622.4 crore from ₹1,737.8 crore in Q1 FY26 and ₹1,820.1 crore in Q2 FY25, including higher contingencies and microfinance-related provisions. Total loan-related provisions stood at ₹10,443 crore, representing 3.2% of the loan book.

The bank’s capital adequacy ratio (CRAR) strengthened to 17.10% from 16.51% a year ago, with Tier-1 CRAR at 15.88%, and liquidity coverage ratio (LCR) averaged 132% in Q2. Deposits fell to ₹3,89,600 crore from ₹4,12,397 crore a year ago, with CASA deposits at 31% of total deposits. Advances were ₹3,25,881 crore, down from ₹3,57,159 crore in Q2 FY25.

Commenting on the results, MD & CEO Rajiv Anand said the bank consolidated its balance sheet by moderating wholesale deposits and microfinance disbursements. “Our core pre-provision operating profit at ₹1,940 crore remained stable QoQ. The increased provisions strengthen the balance sheet and accelerate normalization of underlying profitability,” he added.

IndusInd Bank operates 3,116 branches and 3,054 ATMs, serving around 42 million customers across India. It also maintains international offices in London, Dubai, and Abu Dhabi, offering retail, SME, microfinance, and digital banking products.