What Led to IndusInd Bank's Rs 2,329 Crore Loss in Q4?
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Synopsis
IndusInd Bank has reported a significant net loss of Rs 2,329 crore for Q4 FY25, marking a drastic shift from profitability in the previous year. With leadership changes underway, the bank aims to address recent accounting discrepancies and restore confidence in its operations.
Key Takeaways
- IndusInd Bank reported a loss of Rs 2,329 crore in Q4 FY25.
- Leadership changes are underway following significant accounting discrepancies.
- The bank aims to submit new CEO recommendations to the RBI by June 30.
- The bank's liquidity remains robust with an LCR of 118 percent for Q4 FY25.
- Despite losses in Q4, it achieved a profit of Rs 2,575 crore for FY25.
New Delhi, May 21 (NationPress) IndusInd Bank disclosed a net loss of Rs 2,329 crore for the March quarter (Q4 FY25), a stark contrast to the profit of Rs 2,349.15 crore recorded in the same quarter of the previous fiscal year.
The bank announced that its Board is in the final stages of selecting new CEOs, with recommendations set to be submitted to the RBI by June 30.
Following a derivatives accounting mishap that significantly diminished the bank's net worth, Managing Director and CEO Sumant Kathpalia has stepped down. Additionally, Deputy CEO Arun Khurana resigned after independent audits revealed accounting inconsistencies in the bank's derivatives portfolio.
In March, the bank revealed that an internal examination had identified discrepancies within its derivatives portfolio. The final evaluation indicated that the overall negative impact on the bank's profit and loss statement as of March 31 was Rs 1,959.98 crore.
In its stock exchange announcement for Q4 results, the bank stated: "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."
During Q4, IndusInd Bank's interest earnings totaled Rs 10,634 crore, reflecting a 13 percent decrease from the Rs 12,199 crore reported in the same quarter of the previous year.
The private lender's net interest income for Q4 FY25 stood at Rs 3,048 crore, representing a 43 percent year-on-year decline, along with a 42 percent decrease on a quarter-over-quarter basis.
As noted through stock exchange updates, the Bank has encountered several significant developments since March 2025.
“These events have been unfortunate for a bank. Nevertheless, the Board and Management are committed to addressing all issues raised in a comprehensive and timely manner,” the private lender affirmed.
The bank reported a strong liquidity position with an average LCR (Liquidity Coverage Ratio) of 118 percent for Q4 FY25, and continues to maintain an LCR of 139 percent for the first half of the ongoing Q1 FY26.
Despite reporting a loss for Q4 due to these extraordinary circumstances, the bank achieved a profit after tax of Rs 2,575 crore for the entire FY25.
Earlier this month, global credit rating agency Crisil placed IndusInd Bank’s long-term debt instruments on 'Rating Watch with Negative Implications,' which includes Rs 4,000 crore worth of Tier II bonds and Rs 1,500 crore of infrastructure bonds.
Point of View
IndusInd Bank's recent financial distress highlights the critical need for accountability in financial management. As the bank navigates through this challenging period, it is essential for stakeholders to remain informed and engaged, ensuring that corrective measures lead to sustainable recovery.
NationPress
01/06/2025
Frequently Asked Questions
What caused IndusInd Bank's loss in Q4?
The loss was primarily due to a derivatives accounting lapse that negatively impacted the bank's net worth, leading to a reported net loss of Rs 2,329 crore.
Who resigned from IndusInd Bank's management?
Managing Director and CEO Sumant Kathpalia and Deputy CEO Arun Khurana both resigned following the discovery of accounting discrepancies.
What actions is IndusInd Bank taking in response to these issues?
The bank's Board is actively selecting new CEOs and is committed to addressing all identified irregularities swiftly and effectively.
What is the current liquidity position of IndusInd Bank?
IndusInd Bank maintains a strong liquidity position with an average LCR of 118 percent for Q4 FY25.
How did IndusInd Bank perform for the full year FY25?
Despite the Q4 loss, IndusInd Bank reported a profit after tax of Rs 2,575 crore for the entire FY25.
