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Reuters
22-04-2025
- Business
- Reuters
India's IndusInd Bank says conducting internal review of microfinance business
BENGALURU, April 22 (Reuters) - IndusInd Bank's ( opens new tab internal audit team was reviewing "certain concerns" in the Indian lender's microfinance business, the company said on Tuesday, about a month after it reported discrepancies in its currency derivatives. The bank, however, stopped short of disclosing what concerns were being investigated in the microfinance unit. The unit, which accounts for 9% of the bank's total loans, has been grappling with elevated bad loans since the last few quarters. Earlier in the day, The Economic Times newspaper reported, opens new tab that the private lender had appointed EY to conduct a forensic audit to probe a 6-billion-rupee ($70.5 million) discrepancy in the microfinance portfolio. The lender said in a statement that it had engaged EY to assist with the review, but did not refer to the amount mentioned by the newspaper. In March, IndusInd reported a $175 million accounting discrepancy in its currency derivatives book, dating back six years, and appointed an external agency to review the findings. IndusInd's shares, which have fallen 13% since the derivative accounting lapse was disclosed, closed 5% lower on Tuesday. ($1 = 85.1580 Indian rupees)
Reuters
04-04-2025
- Business
- Reuters
India's IndusInd Bank posts flat quarterly deposit growth amid accounting lapse
April 4 (Reuters) - IndusInd Bank's ( opens new tab fourth-quarter loan growth dropped 5.2% and its deposit expansion remained flat from three months ago, the Indian private lender said on Friday, weeks after disclosing an accounting lapse in its derivatives portfolio. The discrepancy at the country's fifth-largest private sector bank resulted in a $175 million hole in its balance sheet, raised concerns over governance and led it to appoint Grant Thornton to conduct a forensic review. On an annual basis, the lender's loans grew a modest 1.4%, while deposits rose 6.8%. The bank's shares are down nearly 25% since the lender disclosed the lapse. The lender in March garnered $2 billion in higher-cost bulk deposits, its biggest monthly haul in at least two years, to shore up its funding base. Its CASA ratio – the share of low-cost current and savings account deposits and a measure of operational efficiency – slipped to 32.8% from 34.9% in the prior quarter and 37.9% a year ago. Its liquidity coverage ratio, or the portion of highly liquid assets held to ensure ability to meet their short-term obligations, stood at 118.4% for the fourth quarter. IndusInd has also been grappling with elevated bad loans in the microfinance segment, leading to a drop in profit in the last two quarters. Despite the accounting lapse, the bank expects to report a profit for the fourth quarter and the financial year 2025, its CEO told CNBC-TV18 in March.
Reuters
17-03-2025
- Business
- Reuters
Moody's places IndusInd Bank's credit assessment on review for downgrade
March 17 (Reuters) - Moody's Ratings said on Monday it has placed IndusInd Bank's ( opens new tab baseline credit assessment (BCA) under review for downgrade due to concerns over "inadequate internal controls" after the lender found discrepancies in its derivative accounts. "The impact of the derivatives transactions, coupled with the ongoing stress in the retail unsecured loans, is likely to hurt the bank's profitability, capital and funding, potentially leading to a downgrade of the BCA," Moody's said. Baseline credit assessments are based on the company's own financial health, without considering any help it might get from related companies or the government. The Mumbai-based lender earlier this month reported it had discovered an accounting discrepancy in the way it booked currency derivatives stretching back at least six years, with an estimated impact of $175 million. "Beyond the accounting issue, IndusInd's potential leadership changes also remains a monitorable," Moody's added. The accounting issue has further compounded worries for the bank's stock which was already under pressure after the central bank last week approved a shorter-than-requested extension for CEO Sumant Kathpalia. Shares of IndusInd Bank are down roughly 28% since the central bank's decision. Moody's maintained its 'Ba1' rating on IndusInd Bank with stable outlook, citing the bank's strong capital, core profitability and stable funding, but said an upgrade of ratings was unlikely in the near term given the review for a downgrade of the BCA.
Reuters
27-02-2025
- Business
- Reuters
India's financial stocks jump as central bank further eases strict lending rules
Feb 27 (Reuters) - Shares of most Indian financial companies, especially those of non-bank and microfinance-focussed lenders, jumped on Wednesday after the central bank further eased its capital requirements for micro loans and bank credit. Financial stocks (.NIFTYFIN), opens new tab, which include non-bank finance companies (NBFCs), jumped about 1%, outpacing the 0.7% increase in banking stocks (.NSEBANK), opens new tab. The benchmark Nifty 50 (.NSEI), opens new tab, in comparison, was flat. The Reserve Bank of India, on Tuesday, trimmed the higher capital requirements introduced in November, the latest in a series of growth-supportive measures since Sanjay Malhotra took over as governor in December. Under his watch, the RBI has eased liquidity, delayed some regulations and loosened restrictions placed on some lenders. "We think this bodes well for the financial sector and lays more emphasis on consumption and growth ... and (we) reiterate our bullish view," Macquarie analyst Suresh Ganapathy said in a note. On the day, Bandhan Bank ( opens new tab gained 6%, while Shriram Finance ( opens new tab, AU Small Finance Bank ( opens new tab and Ujjivan Small Finance Bank ( opens new tab rose about 5% each. Cholamandalam Investment and Finance ( opens new tab and Aditya Birla Capital ( opens new tab advanced 4.5% each. Bajaj Finance ( opens new tab rose 2.7% and IndusInd Bank ( opens new tab gained 2%. In comparison, top private lenders such as ICICI Bank ( opens new tab and HDFC Bank ( opens new tab were up under 1%. The RBI's move should help most NBFCs' earnings, Morgan Stanley analysts said, picking Aditya Birla Capital, PNB Housing, Shriram Finance and Bajaj Finance as top beneficiaries. Nomura analysts said banks with higher microfinance loan exposure, such as Bandhan Bank, IndusInd and AU Small Finance Bank, would also get much needed relief. Since the rules were implemented in November, Aditya Birla Capital's shares had slid 16%, while AU Small Finance Bank and IndusInd Bank sank 28% and 31%, respectively. The worst hit, with a 38% tumble, was Bandhan Bank -- the day's top gainer. However, Axis Bank Chief Economist Neelkanth Mishra cautioned that a reversal in the broad-based slide in loan growth -- caused by high liquidity costs and the RBI's discomfort with high loan-to-deposit ratios -- could take time. "While these (RBI) signals should help revive lending, we believe the binding constraint remains durable liquidity."
