IndusInd Bank's retail & small biz deposits decline by Rs 3.5k cr in Q4

Advances contract by Rs 19,000 cr in Q4 but increased 1.4% Y-o-Y

Private sector lender IndusInd Bank disclosed on Friday that its retail and small business customer deposits declined by ₹3,550 crore during the quarter ending March 2025 (Q4FY25), dropping from ₹1.88 trillion to ₹1.85 trillion.

 

However, the bank's overall deposits grew marginally by 0.4 per cent compared to the December quarter (Q3FY25).

 

The deposit portfolio at the end of the March quarter stood at ₹4.11 trillion, reflecting a 6.8 per cent year-on-year (Y-o-Y) growth from ₹3.84 trillion.

 

The current account and savings account (CASA) deposit ratio decreased by 210 basis points (bps) between the December and March quarters, reaching 32.8 per cent as of March 2025.

 

During this period, the bank's overall advances portfolio shrank by around ₹19,000 crore from the December quarter.

 

Net advances at the end of the March quarter stood at ₹3.47 trillion, marking a 1.4 per cent Y-o-Y increase but a 5.2 per cent decline sequentially.

 

In terms of advances, the bank's corporate portfolio contracted by around 5 per cent Y-o-Y and more than 15 per cent sequentially. Its consumer business grew by 6.3 per cent Y-o-Y and 3.4 per cent sequentially.

 

Additionally, the bank disclosed that its daily average liquidity coverage ratio (LCR) for Q4FY25 was at 118.4 per cent and 136.2 per cent as at March 31, 2025.

 

LCR of the bank was at 113 per cent as of March 9, 2025, a day prior to its disclosure relating to discrepancies in the derivative portfolio. 

 

On March 10, IndusInd Bank disclosed that in an internal review it had found discrepancies in its derivative portfolio, which will have an adverse impact of 2.35 per cent on its net worth.

 

The bank stated that it had appointed an external agency to review the estimate of the loss in the derivative portfolio.

 

Later the bank disclosed that it has decided to appoint an independent professional firm to conduct a comprehensive investigation to identify the root cause of the discrepancies in the derivative portfolio.

 

Amid this, the Reserve Bank of India (RBI) issued a statement addressing speculations surrounding the bank.

 

RBI assured the banks’ depositors not to react to speculative reports surrounding the bank as the bank’s financial health remains stable and is being monitored closely by the Reserve Bank.

 

Meanwhile, the bank borrowed heavily from the certificate of deposits (CDs) market to tide over any liquidity situation that may arise from speculations around the bank.

 

In March, the bank raised ₹16,550 crore in CDs at a coupon rate of 7.75-7.90 per cent. This was about 5x higher than the average amount it typically raised from the CD market previously.

 

Recently, the RBI granted Sumant Kathpalia, the current managing director (MD) & chief executive officer (CEO) of the bank only a one-year extension. This was despite the banks’ board recommending a three-year reappointment.

 

Kathpalia, in an analyst call, had highlighted that the discrepancies found in the derivative portfolio of the bank could be one of the reasons why RBI gave him only a year’s extension.

 

Kathpalia has assured that Indusind Bank will report net profit in Q4FY25 as well as for the full financial year (FY25). This is despite the hit on the bottom line due to discrepancies discovered in the derivative portfolio.

 

The bank’s shares closed at ₹684.70, down 3.48 per cent on the NSE on Friday.