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Business Recorder
22-05-2025
- Business
- Business Recorder
India's IndusInd rebounds on bets bank has come clean on accounting issues
BENGALURU/MUMBAI: Shares of India's IndusInd Bank rebounded from sharp falls on Thursday on bets that the worst was behind the private lender, a day after it logged a record quarterly loss, hit by past accounting discrepancies. Its stock swung wildly through the day, losing as much as 6% in the morning session to hit an intraday low of 725.8 rupees and then recovering to climb as much as 9.8% to 796.7 rupees, an intraday high. It closed 2% higher. IndusInd disclosed in March that years of incorrect accounting of internal derivative trades led to a $230 million hit to its accounts. Separately, an internal audit of its microfinance business found that around $80 million was incorrectly recorded as interest over three quarters. On Wednesday, the lender posted its largest-ever quarterly loss and said it suspected fraud by some employees led to accounting lapses. The bank's financials reflect full and fair representation of all the concerns brought to its attention, IndusInd Bank's Chairman Sunil Mehta said in a post-earnings conference call on Wednesday. Six officials of India's IndusInd Bank under investigation for insider trading, sources say The lender's promoter IndusInd International Holdings was committed to infusing liquidity into the bank if the need arises, chairman Ashok Hinduja said in a statement. Promoter is an Indian market term for large shareholders. Yes Securities said the latest quarter seemed like IndusInd's 'attempt to come clean.' Jefferies analysts added that while uncertainty and low profitability will remain concerns for the bank, 'historical trends indicate that current valuations are near lows'. At least six brokerages downgraded their ratings on the stock after the results and 13 slashed their price targets on concerns over profitability and uncertainty over management succession. IndusInd's CEO, Sumant Kathpalia, and deputy, Arun Khurana, stepped down last month. 'There is no clarity on new management team, how they gain investor confidence, improve profitability and importantly, whether they will execute better than peers,' HSBC said.
Business Standard
22-05-2025
- Business
- Business Standard
IndusInd Bank reports dismal Q4 outcome
IndusInd Bank reported a standalone net loss of Rs 2,235.99 crore in Q4 FY25 as against a net profit of Rs 2,346.84 crore posted in Q4 FY24. Total income declined 22.83% year on year to Rs 11,342.65 crore in the quarter ended 31 March 2025. The banks financial results include the financial results of its wholly owned subsidiary, Bharat Financial Inclusion (BFIL), a business correspondent (BC) of the bank involved in originating small-ticket MFI loans for the bank, and IndusInd Marketing and Financial Services Private (IMFS), an associate of the bank. The private lenders reported consolidated net loss of Rs 11,342.65 crore in Q4 FY25 as against a net profit of Rs 2,349.15 crore in Q4 FY24. Operating expenses during the quarter were at Rs 4,248.04 crore, up 11.70% YoY. On the asset quality front, the bank's gross non-performing assets (NPAs) stood at Rs 11,046.39 crore as on 31 March 2025, as against Rs 6,693.38 crore as on 31 March 2024. The gross NPA were at 3.13% of gross advances as on 31 March 2025 as against 1.92% as on 31 March 2024. Net Non-Performing Assets were 0.95% of net advances as on 31 March 2025, compared to 0.57% as on 31 March 2024. The provision coverage ratio was consistent at 70% as at 31 March 2025. Provisions and contingencies (other than tax) for the year ended 31 March 2025 were Rs 7,136 crores, compared to Rs 3,885 crores for the corresponding quarter of previous year. The banks total deposits stood at Rs 4,10,862 crore as on 31 March 2025, registering a 6.83% increase from Rs 3,84,586 crore a year earlier. CASA deposits were at Rs 1,34,789 crore, with current account deposits at ₹40,764 crore and savings account deposits at Rs 94,025 crore. The CASA ratio stood at 32.8% as of March 31, 2025. Retail deposits, as per the Liquidity Coverage Ratio (LCR) framework, rose 9% year-on-year to Rs 1,85,180 crore from Rs 1,69,441 crore as on 31 March 2024. As of March 31, 2025, the bank's distribution network comprised 3,081 branches and banking outlets, along with 3,027 onsite and offsite ATMs, compared to 2,984 branches and 2,956 ATMs as of 31 March 2024. The bank's client base reached 41 million as of 31 March 2025. On a full-year basis, the companys net profit plunged 71.31% to Rs 2,575.54 crore, despite a 2.20% increase in total income, which rose to Rs 56,358.1 crore in FY25 compared to FY24. Net interest income for FY25 stood at Rs 19,031 crore, compared to Rs 20,616 crore in FY24. Fee and other income for FY25 stood at Rs 7,690 crore, compared to Rs 9,396 crore in FY24. The bank's pre-provision operating profit (PPOP) stood at Rs 3,601 crore in the December quarter, down 10.91% from Rs 4,042 crore reported in the same period a year ago. Sunil Mehta, the chairman of the board of directors, 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 has shown a strong resolve to address all the identified issues in timely and comprehensive manner. The Bank has a robust Networth and balance sheet even after absorbing impact from all the past anomalies. The learnings from these incidents will be imbibed to reinforce the governance and compliance culture of the organisation. The Bank at its core has profitable business model and it will pivot towards sustainable growth as we put this episode behind us. The Bank would like to express its gratitude to the regulators and particularly the RBI for its support and guidance in helping navigating these challenging times. Soumitra Sen and Anil Rao, the members of the committee of executives, IndusInd Bank said, The Banks core competencies remain strong which allows it to take these challenges in its stride. We are confident that the Bank will emerge stronger as the foundation will become robust incorporating the learnings from recent events. The management is committed to ensure interests of all the stakeholders are protected and deliver on the near and long term growth agenda with unrelenting focus on governance. We are thankful to the Board for their continued guidance and direction, all the employees who have ensured smooth customer service in current times, the regulators as well as shareholders in helping the franchise and we look forward to their continued support. IndusInd Bank was incorporated in 1994 as a commercial bank under the Banking Regulation Act, 1949. The Bank is publicly held and provides a wide range of banking products and financial services to corporate and retail clients besides undertaking treasury operations. The Bank operates in India including at the International Financial Service Centres in India. Shares of IndusInd Bank rose 0.67% to Rs 776.30 on the BSE.
Mint
22-05-2025
- Business
- Mint
IndusInd Bank share price gains despite record Q4 loss, brokerage downgrades. Is the worst priced in?
IndusInd Bank share price: Shares of private sector lender IndusInd Bank rebounded from the day's low to trade higher on Thursday, May 22, despite posting a record quarterly loss during the March quarter (Q4) of the financial year 2024-25 (FY25). However, the outlook for the lender remains weak as several brokerages downgraded IndusInd Bank stock post Q4 results and as it reported fresh fraud. IndusInd Bank share price crashed nearly 6% in the opening trade today to hit the day's low of ₹ 725.65 on the BSE. However, the stock erased all losses and traded over 2% higher at ₹ 788.35 apiece around 9.45 am to emerge as the best performer in the Nifty 50 index. Despite this, in 2025 so far, IndusInd Bank stock has tumbled 19% and is down 45% for the year. After markets closed on Wednesday, IndusInd Bank reported a record loss of ₹ 2,329 crore for the March quarter — its worst financial performance so far. The loss came as the bank's interim management decided to clean up its books and reveal the full impact of past mistakes in accounting, and stating they are starting FY26 on a fresh note. A major reason for the poor results was a rise in bad loans, which jumped to ₹ 5,014 crore. A big chunk of this came from the microfinance business, where ₹ 1,800 crore worth of loans had been wrongly classified earlier and were now shown as bad loans. There was also some trouble in the two-wheeler loan segment. During this quarter, the bank revealed several issues: A ₹ 1,960 crore loss from wrongly reported derivative trades; reversal of ₹ 674 crore in interest income that had been recorded incorrectly; discovery of a ₹ 172 crore fraud involving employees misclassifying money as income; correction of ₹ 595 crore in wrong entries made in the past under "Other Assets" and "Other Liabilities". The bank is now being overseen by experienced banker Sunil Mehta in a non-executive role. He said that all the problems have been identified and fully disclosed, and assured that the bank is on the path to recovery and stability. The management plans to rebuild trust and improve performance moving forward. "... the financial impact of all the issues that we have declared has already been undertaken in financial year 2024-25," Mehta said in a post-results conference with analysts, insisting that it starts FY26 with a clean slate. According to a Reuters report, at least five brokerages have downgraded IndusInd Bank stock since the results, while 10 slashed their price targets, taking the median price target to ₹ 787.50 from ₹ 850 last month, as per data compiled by LSEG. Domestic brokerage IIFL Securities is one such firm to downgrade the lender and cut the IndusInd Bank share price target. It said following the derivatives accounting loss announcement 2-months ago, IndusInd Bank has announced multiple other frauds. It estimates a total P&L hit of ₹ 4700 crore (7% of 3Q networth). "We forecast 12% loan growth in FY26, further NIM contraction due to the repo cuts, slower MFI growth, elevated cost of raising new funds and negative carry due to excess liquidity. With weak fee income and average credit cost of 140 bps, this should result in ROA of 68/83 bps and ROE of 6%/7.5% in FY26/FY27E respectively," it said, adding that it is downgrading the stock to 'Reduce' with a revised target price of ₹ 690. Meanwhile, Nuvama Research said the visibility for FY26E is low because it is unclear what happens to retail deposits after disclosures on repeated discrepancies in FY25. "Management indicated that after one-offs, the operating loss of INR 5bn would turn to a PPOP of INR 30.6bn (versus INR 36bn QoQ). We could not reconcile the adjusted and reported PPOP and fees based on explanations on the call/disclosures, though NII could be reconciled," it added. It believes the requirement of maintaining high liquidity will also impact the net interest margins. Therefore, the brokerage has slashed its target price to ₹ 600 from ₹ 750 earlier and reiterated its 'Reduce' rating for the stock. HSBC downgraded the stock by two notches to "reduce" from "buy". "There is no clarity on new management team, how they gain investor confidence, improve profitability and importantly, whether they will execute better than peers," HSBC said, according to a Reuters report.
Time of India
22-05-2025
- Business
- Time of India
Q4 Loss at ₹2.3k Crore: IndusInd Trips on Lapses, Ends in Red
IndusInd Bank said it is probing key management personnel (KMP) for 'wrongful accounting practices' that could amount to fraud, as the Hinduja-promoted lender reported a net loss of ₹2,328 crore in the fourth quarter of FY25, against net profit of ₹2,349 crore a year ago. For FY25, the bank reported a 71% fall in net profit to ₹2,575 crore, as it absorbed the entire financial impact of derivatives-related accounting lapses and underreporting of microfinance bad loans, seeking to start FY26 with a clean slate. In regulatory filings on Wednesday, the bank said investigations into its accounts showed that the top management that exited the company under suspicious circumstances may have committed accounting fraud, misled the board of directors, and hid the truth from auditors to present a rosy picture. The bank said board-commissioned probes 'revealed an involvement of senior bank officials, including former KMPs, in overriding key internal controls.' They also showed 'a concealment from the board and the statutory auditors of the wrongful accounting practices adopted, over such period of time, as indicated in the… investigation/ review reports.' IndusInd said 'there is likely involvement of senior management in the matters' and that it had 'reason to believe that suspected offences involving fraud may have been committed.' The observations were part of the auditors' report filed along with the earnings of the bank. The auditors of the bank are MSKA & Associates and Chokshi & Chokshi LLP. The auditors have referred the suspected fraudulent actions of the past management to the government, which may lead to criminal prosecution. Chairman Sunil Mehta said IndusInd Bank's balance sheet remains healthy after absorbing all the negative charges, with a capital adequacy ratio of 16.24%, a provision coverage ratio of 70%, and a liquidity coverage ratio at 139% in the first half of this quarter. 'The financial impact of all the above has been fully taken in the audited financial statements for FY25. The approach toward financials has been to start FY26 on a clean slate, without carrying forward any issues,' Mehta told analysts soon after announcing the results. 'The bank has thoroughly reviewed all the lines of accounting and has taken a conservative view in some of the accounting treatments. This has reflected in a few one-offs versus the business-as-usual run rate,' he added. The chairman also said the bank will not wait for the new chief executive to join and act on the lapses, while acknowledging that these were not expected from a bank like IndusInd. He said the matter of likely fraud has been reported to the relevant government agency. 'The board has also taken a very serious view with respect to staff accountability across levels to reinforce the governance and compliance culture, and is in the process of taking action for staff accountability,' said Mehta. Erstwhile managing director and chief executive Sumant Kathpalia and deputy CEO Arun Khurana, who were designated as KMP for the period under review, resigned late last month. Mehta said IndusInd is in the process of identifying a new chief executive within the June 30 deadline stipulated by the Reserve Bank of India (RBI). The board had commissioned investigations regarding forex derivatives transactions of Rs 1,960 crore, incorrect interest income of Rs 673.8 crore and fee income of Rs 172.6 crore, apart from certain incorrect manual entries posted in the 'other assets' and 'other liabilities' of the previous year, amounting to Rs 595 crore.
Economic Times
22-05-2025
- Business
- Economic Times
IndusInd Bank utilizes Rs 1,325 crore contingency buffer amid accounting lapses and bad loan underreporting
Total loans stood at ₹3.45 lakh crore, up 1% YoY at the end of March, while deposits rose 7% to ₹4.11 lakh crore. IndusInd Bank addressed financial discrepancies in the March quarter. The bank used its contingency buffer to manage the impact. Accounting errors in the microfinance sector led to revenue reversal. Derivative-related issues also affected income. Net interest margin and income experienced declines. Total loans saw a slight increase, while deposits rose. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: IndusInd Bank has fully utilised its contingency provisioning buffer of ₹1,325 crore in the March quarter while absorbing the financial impact of derivative-related accounting lapses and underreporting of bad loans in the microfinance a buffer is like a rain check that lenders utilise against unexpected and unforeseen contingencies. In the March quarter, the bank's provisioning and contingencies nearly tripled YoY to ₹2,522 crore."The reviews (by the bank) identified that over the first three quarters of FY2025, there was incorrect recording of interest income and fee income (in the microfinance book). The review has also identified the misclassification of certain microfinance loans, which have resulted in under-provisioning and non-recognition of NPAs aggregating ₹1,885 crore," chairman Sunil Mehta said in a post-earnings Rao, member of the committee of executives that oversees the bank's daily operations, said the lender reversed microfinance revenue of ₹423 crore for the accounting error identified by the internal audit team during the review of the microfinance the bank recognised materially high slippages in the microfinance business of ₹3,509 crore in the March quarter, leading to interest income reversal of ₹178 crore, Rao also said the bank reversed other income by ₹1,960 crore on account of derivative-related discrepancies disclosed on March 10, 2025."If we did not have these one-offs, we would have been at a net interest margin of 3.47% and a pre-provision operating profit of ₹3,062 crore," Rao the March quarter, net interest margin, or core profitability from operations, fell to 2.25% from 4.26% a year ago and 3.93% a quarter interest income - the difference between interest earned from loans and paid to depositors - fell to ₹3,048 crore in the March quarter from ₹5,376 crore a year ago, while other income plunged 72% to ₹709 loans stood at ₹3.45 lakh crore, up 1% YoY at the end of March, while deposits rose 7% to ₹4.11 lakh crore.
