IndusInd Bank shares fall 1.5% ahead of Q4; lender likely to post loss

IndusInd Bank's stock fell as much as 1.5 per cent ahead of its fourth quarter earnings

Shares of IndusInd Bank traded over 1 per cent lower on Wednesday ahead of its quarterly results, with the lender expected to report a loss of over ₹200 crore.

 

IndusInd Bank's stock fell as much as 1.5 per cent during the day to ₹770 per share. The stock trimmed some losses to trade 1.01 per cent lower at ₹774 apiece, compared to a 0.51 per cent advance in Nifty50 as of 9:57 AM. 

 

Shares of the company have fallen over 10 per cent from their recent peak of ₹863, which it hit earlier this month. In March, the stock plunged over 30 per cent after noting the discrepancies in its derivatives portfolio. The stock has fallen 19 per cent this year, compared to a 4.9 per cent advance in the benchmark Nifty50.   Tract LIVE Stock Market Updates Here

IndusInd Bank Q4 preview

The lender is expected to report a net loss of over ₹200 crore in Q4FY25, according to a consensus estimate of 12 analysts polled by Bloomberg.

 

Additionally, its net interest margin (NIM) is expected to contract sharply due to the various accounting lapses the bank has reported so far, including in the microfinance business. The bank’s NIM – a measure of profitability of banks – stood at 3.93 per cent at the end of December 31, 2024.

 

So far in the first nine months of the financial year under review (9MFY25), the bank’s net profit stood at ₹4,904 crore, down 26 per cent Y-o-Y from ₹6,628 crore in 9MFY24.

 

In Q3FY25, the bank had reported a net profit of ₹1,402 crore, down 39 per cent year-on-year (Y-o-Y) due to sharp rise in provisions, owing to slippages in the microfinance portfolio. In Q4FY24, the bank’s net profit stood at ₹2,349 crore. 

IndusInd Bank Derivatives discrepancies

On March 10, the bank had disclosed to the exchanges that in an internal review, it had found discrepancies in its derivatives portfolio, which would have an adverse impact of 2.35 per cent on its net worth as of December 2024, or roughly ₹1,530 crore.

 

The external agency — PwC — appointed to validate the findings of its internal review identified discrepancies, estimated a negative impact of ₹1,979 crore as of June 30, 2024. Based on the external agency’s report, the bank said that the discrepancies would have an adverse post-tax impact of 2.27 per cent on its net worth as of December 2024.  

InCred Equities on IndusInd Bank Q4

The impact of derivatives exposure will be partly taken through the interest income line and the rest through trading gains, analysts at InCred Equities said. The recent unearthing of the incorrectly recorded interest income in the MFI business increases the negative impact on net worth to 3.1 per cent post-tax, from 2.35 per cent earlier. 

 

"The margin impact due to the MFI business accounting lapse works out to around 17 basis points (bps) and the RoA (return on assets) impact to nearly 10 bps. Based on these accounting lapses, we believe core margin could be structurally lower by 25-30 bps,” said InCredi Equities in a note.