IndusInd Bank Returns to Profitability in December Quarter After Previous Loss
IndusInd Bank has made a notable recovery in the third quarter of fiscal year 2026, swinging back to profit after facing a loss in the preceding quarter. The Mumbai-based private sector lender posted a net profit of Rs 128 crore for Q3 FY26, a significant turnaround from the Rs 437 crore loss recorded in Q2. However, this performance remains sharply lower compared to the same period a year earlier, when the bank reported a profit of Rs 1,402 crore.
Leadership Transition and Strategic Appointments
In a key development, the bank announced a change in its leadership structure. Former State Bank of India executive Arijit Basu has been appointed as the non-executive chairman, succeeding Sunil Mehta, who is set to retire this month. This move comes as part of broader organizational changes under the new leadership.
CEO Rajiv Anand, who took charge in August 2025 following the departure of former CEO Sumant Kathpalia due to accounting irregularities related to derivatives that resulted in a nearly Rs 2000 crore loss, is actively reviewing the bank's talent pool. Anand revealed plans to hire several key positions, including a Chief Technology Officer, chief risk officer, and a retail head. These additions complement recent inductions across various domains such as wholesale banking, human resources, data management, SME banking, and digital roles, including the appointment of a Managing Director and CEO for BFIL.
Financial Performance and Income Analysis
The sequential profit recovery occurred despite ongoing pressure on core income streams. Net Interest Income (NII) showed a modest increase of 3.5% quarter-on-quarter, reaching Rs 4,562 crore, but it declined by 13% compared to the previous year. Other income experienced a more pronounced drop, falling 28% to Rs 1,707 crore, primarily due to weaker treasury and fee-based flows.
Operating expenses remained relatively stable at Rs 3,999 crore, which helped in stabilizing operating profit. However, provisions saw a significant rise, climbing 20% to Rs 2,096 crore. As of the end of December, the bank held specific Non-Performing Asset (NPA) provisions amounting to Rs 8,231 crore.
Balance-Sheet Restructuring and Asset Quality
IndusInd Bank continued its deliberate balance-sheet reset during the quarter. Deposits decreased by 4% year-on-year to Rs 3.94 lakh crore, while advances contracted by 13% to Rs 3.18 lakh crore. This reduction is attributed to the bank's strategic exit from bulk deposits and low-yield assets, part of its efforts to optimize its financial structure.
Asset quality showed a marginal improvement on a sequential basis. The gross NPA ratio eased slightly to 3.56% from 3.60% in the previous quarter, though it remains higher than the 2.25% recorded a year ago. In absolute terms, gross NPAs increased to Rs 11,605 crore from Rs 8,375 crore, reflecting the ongoing challenges in the loan portfolio.
Returns and Strategic Outlook
Returns metrics remained subdued during the quarter. Return on Assets (RoA) stood at 0.10%, while Return on Equity (RoE) was 0.79%. On a positive note, the bank's capital adequacy ratio remained comfortable at 16.94%, providing a buffer for future growth.
Management indicated that Q3 represents an early transition phase under its three-year strategic plan. Factors such as steady margins, lower deposit costs, and stringent cost control measures were cited as key drivers behind the quarter-on-quarter rebound, even as year-on-year comparisons remain weak due to the bank's restructuring efforts and broader market conditions.
