What Caused IndusInd Bank’s Q1 Net Profit to Plummet by 68%?
Click to start listening
Synopsis
IndusInd Bank reported a staggering 68% decline in net profit for Q1 FY26. With net interest income and total advances also down, this article explores the bank's financial performance and future outlook amidst these challenges.
Key Takeaways
- Net profit fell by 68% YoY to Rs 684 crore.
- Net interest income declined by 14% YoY.
- Total advances shrank by 4% YoY.
- Gross NPAs increased to 3.64%.
- Chairman assures a strategic outlook moving forward.
Mumbai, July 28 (NationPress) IndusInd Bank revealed a significant 68% year-on-year (YoY) decline in its net profit for the first quarter of the financial year 2025-26 (Q1 FY26) on Monday. The private lender reported a profit of Rs 684 crore for the June quarter, a stark contrast to Rs 2,152.16 crore in the same quarter last year (Q1 FY25), as per its stock exchange disclosure.
The bank's net interest income (NII) also experienced a 14% YoY drop, reaching Rs 4,640 crore.
Fee-based and other income fell to Rs 2,157 crore, down from Rs 2,442 crore in Q1 FY25, according to the regulatory filing.
Total income for the quarter, incorporating both interest and fee revenue, amounted to Rs 14,421 crore, a decline from Rs 14,988 crore recorded in the same quarter last year.
When it comes to business performance, the bank's total advances decreased by 4% YoY, totaling Rs 3.34 lakh crore.
In consumer banking, the vehicle finance loan portfolio was at Rs 96,357 crore, while non-vehicle finance stood at Rs 76,508 crore and micro loans reached Rs 28,408 crore.
The corporate banking advances were reported at Rs 1.33 lakh crore, making up 40% of the bank’s overall lending.
The bank's balance sheet showed a modest growth, with total assets amounting to Rs 5.39 lakh crore as of June 30, reflecting a 2% increase from Rs 5.30 lakh crore a year earlier.
Deposits totaled Rs 3.97 lakh crore, slightly dipping from Rs 3.98 lakh crore in June 2024.
CASA (Current and Savings Account) deposits accounted for 31.48% of total deposits, with savings deposits at Rs 91,113 crore and current account deposits at Rs 33,892 crore.
However, asset quality showed signs of deterioration during the quarter, with gross non-performing assets (NPAs) escalating to 3.64% of total advances, up from 3.13% at the end of March 2025.
Net NPAs rose to 1.12% from 0.95% in the previous quarter. Despite these challenges, the bank maintained a stable provision coverage ratio of 70%.
Provisions and contingencies for the quarter totaled Rs 1,760 crore, down from Rs 2,522 crore in the March 2025 quarter.
Total provisions related to loans reached Rs 10,472 crore, representing 3.14% of the total loan book.
Chairman Sunil Mehta recognized the difficulties faced in the last quarter but affirmed that the bank has provided clear and profitable results in Q1.
He assured stakeholders that the leadership transition process is progressing well, and the Board is optimistic about the future.
Point of View
The performance of IndusInd Bank reflects broader economic challenges. While the sharp decline in net profit raises concerns, the bank's stable provision coverage ratio and modest asset growth indicate a cautious yet strategic approach to navigating these turbulent times.
NationPress
30/07/2025
Frequently Asked Questions
What caused the decline in IndusInd Bank's net profit?
The decline in net profit can be attributed to reduced net interest income, decreased fee-based income, and a drop in total advances.
How did the asset quality change in Q1 FY26?
Asset quality weakened, with gross non-performing assets rising to 3.64% of total advances, compared to 3.13% in the previous quarter.
What is the current provision coverage ratio?
The bank maintained a provision coverage ratio of 70% despite the rise in non-performing assets.
How have total assets changed year-over-year?
Total assets increased by 2%, reaching Rs 5.39 lakh crore as of June 30.
What is the outlook for IndusInd Bank moving forward?
The bank is optimistic about future growth and is focusing on stabilizing its operations, as indicated by Chairman Sunil Mehta.
