Why Did IndusInd Bank's Net Advances Decline by Nearly 4%?
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Synopsis
IndusInd Bank faces a challenging financial landscape as it reports a significant decline in net advances and deposits. With a rare net loss recorded last quarter, we delve into the factors contributing to this downturn and the implications for the bank's future.
Key Takeaways
- 3.9% YoY decline in net advances to Rs 3,34,477 crore.
- Significant drop of 14.4% in corporate banking.
- CASA ratio fell to 31.49% as of June 30.
- Rare net loss of Rs 2,328 crore reported last quarter.
- Consumer business segment showed 4.8% growth YoY with slight sequential decline.
Mumbai, July 5 (NationPress) Private lender IndusInd Bank has disclosed a 3.9 percent year-on-year (YoY) decrease in net advances, totaling Rs 3,34,477 crore for the quarter ending June 30 (Q1 FY26). The corresponding figure from the previous year (Q1 FY25) was Rs 3,47,898 crore. On a sequential basis, there was a drop of 3.1 percent from Rs 3,45,019 crore reported in the March quarter (Q4 FY25).
The decline was primarily influenced by a poor performance in the bank’s corporate banking sector, which saw a significant drop of 14.4 percent YoY and 6.2 percent from the last quarter.
On the other hand, the consumer business segment demonstrated a modest growth of 4.8 percent YoY but experienced a slight decline of 0.9 percent sequentially.
Total deposits amounted to Rs 3,97,233 crore, reflecting a 0.3 percent decrease from the previous year and 3.3 percent lower than the last quarter.
The CASA (current account savings account) ratio, an essential measure of low-cost deposits, also fell to 31.49 percent as of June 30. This is a consistent decline from 32.81 percent at the end of March 2025 and 36.67 percent a year ago.
Deposits from retail and small business customers experienced a slight decrease to Rs 1,84,709 crore, down from Rs 1,85,133 crore in the prior quarter.
The bank’s average Liquidity Coverage Ratio (LCR) for the April-June quarter was 141.27 percent, with a daily LCR of 145.26 percent as of June 30.
This financial strain was further highlighted in IndusInd Bank’s last quarter performance, as it reported a rare net loss of Rs 2,328 crore for the January-March 2025 period. This marked the bank's first quarterly loss in two decades, the previous instance being in Q4 of FY2006 when Bhaskar Ghose was the CEO.
The only other occurrence of a quarterly loss in the bank’s history dates back to March 2001. The recent loss was attributed to earlier reported accounting issues and increasing stress in the microfinance portfolio, which significantly affected the balance sheet.
Point of View
I believe that IndusInd Bank's recent performance highlights the volatile nature of the banking sector. The decline in net advances and deposits, coupled with a rare net loss, raises critical questions about the bank's strategic direction. Stakeholders should closely monitor these developments as they may influence broader market confidence.
NationPress
15/07/2025
Frequently Asked Questions
What caused the dip in IndusInd Bank's net advances?
The decline was primarily driven by a significant drop in the bank’s corporate banking performance, which fell sharply by 14.4% YoY.
How did the consumer business segment perform?
The consumer business segment showed a modest growth of 4.8% YoY, but it also experienced a slight sequential decline of 0.9%.
What is the current CASA ratio for IndusInd Bank?
The CASA ratio as of June 30 stood at 31.49%, showing a steady decline from previous quarters.
What was the bank's net loss in the last quarter?
IndusInd Bank reported a rare net loss of Rs 2,328 crore for the January-March 2025 period.
When was the last time IndusInd Bank reported a net loss?
The last occurrence of a net loss was in Q4 of FY2006.
