October 19, 2025

IndusInd Bank surprised everyone by reporting a net loss of Rs 437 crore in the second quarter of FY26. Just a year ago, in Q2 FY25, it had posted a strong net profit of Rs 1,331 crore. What went wrong? The answer lies in financial numbers that tell a clear story. Net Interest Income (NII), the bank’s main earning, slipped 17.6% from Rs 5,347 crore to Rs 4,409 crore compared to last year. Even the Net Interest Margin (NIM), which shows profit from lending activities, fell from 4.08% to 3.32%. Fee and other income also took a hit, dropping from Rs 2,185 crore to Rs 1,651 crore in the quarter. The bank's yield on assets decreased to 8.75% from 9.58%, while the cost of funds slightly improved to 5.43% from 5.54%. Operating expenses edged up a bit to Rs 4,013 crore from Rs 3,932 crore, keeping total expenses almost steady at Rs 11,212 crore. Pre-provision operating profit (PPOP) dived to Rs 2,047 crore from a robust Rs 3,600 crore in Q2 FY25. The balance sheet size shrank too, standing at Rs 5,27,490 crore versus Rs 5,43,407 crore the previous year. Deposits fell to Rs 3,89,600 crore from Rs 4,12,397 crore, with CASA deposits amounting to Rs 1,19,771 crore, about 31% of total deposits. Loan advances were down at Rs 3,25,881 crore against Rs 3,57,159 crore. On the bright side, asset quality showed some improvement. The gross Non-Performing Assets (NPA) ratio declined slightly to 3.60% from 3.64%, and net NPA improved to 1.04% from 1.12%. The Provision Coverage Ratio rose to a healthy 72%, with provisions and contingencies climbing to Rs 2,631 crore from Rs 1,820 crore. Capital strength also improved, with Total Capital Adequacy Ratio at 17.10% (up from 16.51%) and Tier 1 Capital Ratio at 15.88% (up from 15.21%). Risk-weighted assets fell to Rs 3,98,256 crore from Rs 4,20,519 crore. Rajiv Anand, MD and CEO of IndusInd Bank, explained the numbers: "During Q2FY26, the Bank consolidated its balance sheet by letting go wholesale deposits and being cautious on microfinance disbursements. Nevertheless, our core pre-provision operating profit at Rs. 1,940 crores remained stable QoQ. Our asset quality trends have been stable in all core businesses except in microfinance wherein industry is facing cyclical pressures. The Bank accelerated write-offs as well as increased provisions on microfinance as a prudent measure. While this has resulted in the Bank showing a loss in Q2, we believe this strengthens the balance sheet and fast-tracks normalisation of underlying profitability." So, while the bank faced tough times this quarter with a loss and shrinking income, smart moves in managing risk and making provisions are paving the way for a stronger tomorrow. The microfinance segment remains a challenge, but with steady core profits and improved capital, IndusInd Bank’s future story looks ready to unfold!

Read More at Economictimes →

Tags: Indusind bank, Q2 fy26, Net loss, Nii, Asset quality, Capital adequacy,