IndusInd Bank's Q3FY26 results: Net profit slumps 91% to ₹128 crore

Private lender posts 91% lower net due to higher provisions and lower income, appoints Arijit Basu as part-time chairman after Sunil Mehta exits

Private sector lender IndusInd Bank swung back to profit in the third quarter of 2025-26 (Q3FY26), but its net for the quarter slumped 91 per cent year-on-year (Y-o-Y) to ₹128 crore, hit by higher provisions and lower net interest and non-interest income. The bank had posted a ₹437 crore loss in Q2FY26.

 

Separately, the bank said Sunil Mehta will cease to be its part-time chairman and director upon completion of his tenure on January 30 as he did not seek to continue beyond his current term. Subsequently, the bank has appointed Arijit Basu to the position, effective January 31, following approval from the Reserve Bank of India (RBI). Basu, who was serving as chairman and non-executive independent director at HDB Financial Services, resigned from that role on Friday with immediate effect.

 

 

Net interest income (NII) of the bank was down 13 per cent Y-o-Y to ₹4,562 crore, as its loan book shrunk 13 per cent Y-o-Y and 3 per cent quarter-on-quarter (Q-o-Q) to ₹3.17 trillion. The bank’s wholesale book has de-grown by 28 per cent Y-o-Y to ₹1.12 trillion, with the large corporate portfolio shrinking 40 per cent Y-o-Y.

 

“On the asset side, disbursements were robust in vehicle finance, retail, and granular corporate book. However, our average loan book de-grew by 2 per cent, driven by continued rundown in micro loans and risk reward-driven calibration in corporates,” said Rajiv Anand, managing director and chief executive officer (MD&CEO), IndusInd Bank.

 

Anand said the bank’s ambition, going forward, is to grow in line with the market in 2026-2027 (FY27) and deliver 1 per cent return on assets (ROA) on an exit basis over the next 12-18 months. The bank’s focus areas going ahead include commercial vehicles, microfinance, and MSME (micro, small, and medium enterprises).

 

Other income of the bank dipped 28 per cent Y-o-Y to ₹1,707 crore.

 

Interestingly, the bank reported improvement in net interest margin (NIM) at a time when other lenders are reporting dip in NIMs due to rate cuts announced by the Reserve Bank of India (RBI).

 

The bank’s NIM in Q3FY26 stood at 3.52 per cent, up 20 basis points (bps) from the previous quarter. According to Anand, the margin expansion is due to some one-time effects. And if that is taken out, NIM would be relatively at the same level as last quarter, and the bank is confident of maintaining these levels, even if there is a rate cut going ahead. The bank reported a NIM of 3.32 per cent in Q2FY26.

 

Provisions and contingencies of the lender increased 20 per cent Y-o-Y to ₹2,096 crore. On a sequential basis, however, provisions and contingencies declined 20 per cent. The bank reported fresh slippages of ₹2,560 crore, against ₹2,537 crore reported in Q2FY26.

 

“Slippages during Q3 have been range-bound in all businesses except micro loans. Slippage in micro loans remained elevated as last quarter. We had implemented stringent underwriting norms earlier this year. These norms are beginning to show effect as incremental stress formation is reducing consistently,” Anand said, adding that the bank continues to work towards reduction in outstanding stress books as is evident in the sequential fall in net non-performing assets (NPAs).

 

Asset quality of the bank improved with gross NPAs declining to 3.56 per cent at the end of Q3FY26, down 4 bps from the previous quarter, and net NPAs standing at 1.04 per cent.

 

Deposits of the bank declined 4 per cent Y-o-Y and 1 per cent Q-o-Q to ₹3.93 trillion. “We continue our approach of right-sizing the balance sheet by shedding inefficient assets and liabilities, and allocating growth capital towards areas of focus. Our average deposits de-grew by 1 per cent, driven entirely by reduction in bulk deposits. Average retail deposits were stable Q-o-Q and grew only modestly on a period-end basis. As a consequence, share of retail deposits inched up to 47.5 per cent from 47 per cent in the previous quarter,” Anand said.

 

“Asset growth, I don't think, is a problem for us. I think the challenge here is to improve both the quality and quantity of our liability franchise, both in terms of retail, granularisation, reduction in bulk deposits, etc.,” Anand said.

 

Since Anand took over as the MD&CEO of the bank in August 2025, the lender has been making appointments in leadership positions after the accounting debacle it faced that year, which led to the exits of its former CEO and deputy CEO. The bank has appointed a new head of wholesale banking; chief human resource officer; chief data officer; head of MSME business; head of digital; and CEO of Bharat Financial.

 

Going forward, the bank is looking to appoint a chief technology officer (CTO), chief risk officer (CRO), head of retail bank, among others, who are expected to join by March this year. With this, the top leadership team will largely be in place, Anand said.

 

Looking ahead, Anand added, the bank is working on a three-year strategy anchored around PACE — protect the endowments; accelerate on key priorities; customer centricity; and execution excellence.