What Caused IndusInd Bank’s Q2 Net Advances to Drop 8% and Deposits to Decline by 5%?
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Synopsis
IndusInd Bank's latest financial report reveals alarming declines in both advances and deposits for Q2 FY26, raising concerns among investors. With a notable dip in net profit and CASA ratio, what factors are impacting the bank's performance?
Key Takeaways
- IndusInd Bank's net advances fell by 8% YoY.
- Net deposits decreased by 5% YoY.
- CASA ratio weakened to 30.80%.
- Net profit saw a steep decline of 68%.
- Gross NPAs rose to 3.64%.
Mumbai, Oct 5 (NationPress) The private sector lender IndusInd Bank has experienced a significant downturn in its business performance for the second quarter of the fiscal year 2025-26 (Q2 FY26), with both advances and deposits witnessing declines on a year-on-year (YoY) and sequential (QoQ) basis.
The bank's net advances totaled Rs 3.27 lakh crore, reflecting an 8 percent decrease compared to the equivalent period of the previous fiscal year and a 2 percent drop from the preceding quarter (Q1 FY26), as disclosed in its filing to the stock exchanges.
Net deposits also decreased to Rs 3.89 lakh crore, indicating a 5 percent YoY decline and a 2 percent drop quarter-on-quarter, as stated by the lender in its filing.
IndusInd Bank's Current Account and Savings Account (CASA) ratio has weakened to 30.80 percent, down from 31.50 percent in the previous quarter and 35.90 percent a year ago.
Furthermore, the lender reported a net profit of Rs 684 crore for the quarter ending June 2025 (Q1 FY26), marking a staggering 68 percent decline from Rs 2,152 crore in the same quarter of the previous year (Q1 FY25).
Net interest income (NII) was recorded at Rs 4,640 crore, a 14.2 percent decrease from Rs 5,408 crore a year prior.
While the bank's net interest margin (NIM) improved sequentially to 3.46 percent from 2.25 percent in the previous quarter, it still fell short of the 4.25 percent recorded a year earlier.
Asset quality exhibited mixed trends in the previous quarter of the current financial year.
Although slippages improved sequentially, gross non-performing assets (GNPAs) rose to 3.64 percent from 3.1 percent in the preceding quarter, with net NPAs increasing to 1.12 percent from 0.95 percent.
The Provision Coverage Ratio (PCR) was reported at 70 percent, according to its earlier filing.
Shares of IndusInd Bank concluded at Rs 747.55 on the BSE on Friday, rising by Rs 3.85, or 0.52 percent.
Point of View
I can confidently say that IndusInd Bank's performance this quarter reflects broader economic challenges. The declines in net advances and deposits raise critical questions about the bank's strategies and market conditions. Stakeholders must remain vigilant as we monitor these developments.
NationPress
06/10/2025
Frequently Asked Questions
What are the reasons for IndusInd Bank's decline in net advances?
The decline in net advances can be attributed to various market conditions and strategic decisions made by the bank, leading to reduced lending activity.
How has the bank's net profit changed?
IndusInd Bank reported a net profit of Rs 684 crore for Q1 FY26, a significant drop of 68% from Rs 2,152 crore in the same quarter last year.
