Derivative losses, weak asset quality lead to Rs 2,329 crore Q4 loss for IndusInd Bank
Hit by losses in the derivative portfolio and weak asset quality, IndusInd Bank Ltd has reported a net loss of Rs 2,329 crore for the quarter (Q4) ended March 2025 as against a net profit of Rs 2,349 crore a year ago.
The two new accounting discrepancies in interest income, unearthed in the internal audits last week worth Rs 674 crore and Rs 595 crore, are also reflected in the March quarter results. On March 10, the bank disclosed that an internal review of its derivative portfolio revealed a potential 2.35 per cent adverse impact on its net worth. This had an approximate impact of Rs 2,000 crore on the bank.
As a result, provisions increased to Rs 2,522 crore in March 2025 as against Rs 950 crore a year ago.
Indicating the worsened asset quality, gross NPAs rose to 3.13 per cent (Rs 11,046 crore) of gross advances as of March 2025 as against 1.92 per cent (Rs 6,693 crore) in March 2024.
Market regulator Sebi is investigating whether six officials at IndusInd Bank engaged in insider trading by selling stock options before accounting issues at the bank became public. On April 29, weeks after IndusInd Bank disclosed accounting lapses and losses in its derivatives portfolio, the bank's Managing Director and CEO Sumant Kathpalia resigned with immediate effect. IndusInd Bank had earlier announced the resignation of deputy CEO Arun Khurana.
'The board has worked in close coordination with the management and all relevant stakeholders so that the bank is forthcoming in highlighting any irregularities which need to be addressed,' the bank said on Wednesday. An in-depth review of all areas of concern was conducted, internally as well as wherever required with the help of competent external advisors, it said.
Sunil Mehta, Chairman of IndusInd Bank, said: 'The board and the management acknowledge that the lapses happened have been unfortunate for an institution like our Bank. However, the board along with the management have shown a strong resolve to address all the identified issues in timely and comprehensive manner.'
'The statutory auditors have done substantive checks with wider sample sizes to analyse any anomalies in financial reporting and given an unqualified opinion. A conservative approach has been adopted in financial reporting to ensure the accuracy and robustness of the financial statements,' the bank said on Wednesday. The board is also in the process of taking necessary steps to assess roles and responsibilities and fixing staff accountability as per the extant laws and internal code of conduct in all the identified irregularities, it said.
The RBI has now advised the bank to submit proposals for appointment of the new CEO for RBI's approval by June 30, 2025. 'The board is at an advanced stage in the selection process and is confident that recommendations will be submitted to the RBI well in advance of the timeline. In the interim, the Committee of Executives (CoE), with members having over 30 years of experience individually, is entrusted to oversee the operations of the bank under the guidance of an oversight committee of the board,' the bank said.
'Overall, the bank's balance sheet remains robust after fully absorbing adverse financial impact,' it said.
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