IndusInd Bank Q3FY25 results: Net profit down 39% at Rs 1,402 crore

Private sector lender IndusInd Bank reported a 39 per cent year-on-year (Y-o-Y) decline in net profit to Rs 1,402 crore in the quarter ended December (Q3FY25) due to a significant jump in provisions and contingencies following higher slippages during the quarter, especially from the microfinance portfolio.

 

Net interest income (NII) of the lender also declined marginally by 1 per cent Y-o-Y to Rs 5,228 crore, while net interest margin (NIM)—a measure of banks’ profitability—declined by 36 basis points (bps) Y-o-Y and 15 bps sequentially to 3.93 per cent.

 

According to the bank’s management, the yield on advances was impacted due to a lower quarter-on-quarter (Q-o-Q) average balance for microfinance and external benchmark-linked repricing. The cost of funds was also higher in the quarter due to an increase in the cost of deposits. As a result, there was a dip in NIM.

 

Slippages in the quarter stood at Rs 2,200 crore, compared to Rs 1,978 crore in the previous quarter. Of the Rs 2,200 crore in gross slippages, Rs 1,920 crore came from consumer books and Rs 280 crore from corporate books. Slippages in the microfinance segment stood at Rs 695 crore.

 

The asset quality of the lender deteriorated in Q3FY25, with the gross non-performing assets (NPA) ratio at 2.25 per cent, compared to 2.11 per cent in the previous quarter. Net NPAs stood at 0.68 per cent in Q3FY25, compared to 0.64 per cent in the previous quarter.

 

Provisions and contingencies in Q3FY25 were up 80 per cent Y-o-Y to Rs 1,743 crore.

 

“Incremental stress in microfinance seems to be peaking out,” said Sumant Kathpalia, managing director and chief executive officer, IndusInd Bank, adding that slippages were higher in the microfinance segment given the industry situation. The asset quality in the rest of the book remained broadly stable, he said.

 

“We should be back to 4 per cent and above NIM starting Q1FY26, and we should start seeing growth in NIMs as we go forward,” Kathpalia added.

 

Overall loan growth was at 12 per cent Y-o-Y and 3 per cent sequentially to Rs 3.66 trillion. The vehicle and microfinance books saw robust disbursements sequentially. The sequential improvement in the microfinance segment’s disbursement was driven by pent-up demand. Other retail loans and the corporate book grew by 19 per cent and 16 per cent, respectively.

 

Deposits, on the other hand, grew 11 per cent Y-o-Y but declined 1 per cent sequentially to Rs 4.09 trillion.

 

“We do not have a growth issue in our retail as well as corporate book. Growth has slowed down in the microfinance segment. The disbursement is coming back, but the lag effect of growth will take some time. In vehicle finance, we have not dropped market share, but the market is such that it is taking some time to grow at a good pace,” Kathpalia said, adding that once stability in microfinance returns, the business should see 16 per cent growth.

 

On the deposit side, the bank’s focus is to grow retail deposits, which are expanding at 14 per cent, he said.

 

On his reappointment, Kathpalia said, “The bank has not got any feedback on this issue.”