IndusInd Bank posts Rs 437 crore loss in Q2 FY26 as NII drops 18% YoY; provisions surge

IndusInd Bank Ltd reported a consolidated net loss of Rs 437 crore for the quarter ended September 30, 2025 (Q2 FY26), compared with a net profit of Rs 1,331 crore in the same period last year. The bank's loss was driven by a sharp fall in core income and a significant rise in provisions, even as the lender maintained stable asset quality and strong capital buffers.

IndusInd Bank’s net interest income (NII) declined 18 percent year-on-year to Rs 4,409 crore from Rs 5,347 crore, as net interest margin (NIM) contracted to 3.32 percent from 4.08 percent a year ago.

Provisions and contingencies for the quarter surged 45 percent to Rs 2,631 crore from Rs 1,820 crore a year earlier. The private sector lender accelerated write-offs and increased provisioning in its microfinance portfolio, where the industry is facing cyclical pressures, said IndusInd Bank Managing Director and CEO Rajiv Anand.

"The bank accelerated write-offs as well as increased provisions on microfinance as a prudent measure,” he said in a statement. Anand added that while this has resulted in the bank reporting a quarterly loss, it strengthens the balance sheet and hastens the normalisation of profitability.

Asset quality stable

The bank’s asset quality remained largely stable despite the challenging environment. Gross non-performing assets (GNPA) ratio stood at 3.60 percent as of September 30, 2025, compared with 3.64 percent at the end of June 2025, while net NPA (NNPA) improved to 1.04 percent from 1.12 percent. Provision coverage ratio (PCR) rose to 71.81 percent from 70.13 percent in the previous quarter.

Total loan-related provisions stood at Rs 10,443 crore, representing 3.2 percent of the loan book.

Capital and liquidity position strong

IndusInd Bank’s capital adequacy remained robust, with its total capital adequacy ratio (CRAR) under Basel III guidelines at 17.10 percent as of September 30, 2025, compared with 16.51 percent a year earlier. Tier 1 capital ratio stood at 15.88 percent. The bank’s liquidity coverage ratio averaged 132 percent during the quarter, well above regulatory requirements.

“The bank has strong capital adequacy with CRAR of 17.10 percent, liquidity with average LCR of 132 percent, and sequentially improved GNPA and NNPA, providing a strong foundation as we work towards delivering sustainable growth,” Anand said.

Deposits and advances moderate

Total deposits fell to Rs 3.90 lakh crore from Rs 4.12 lakh crore a year earlier, while advances declined to Rs 3.26 lakh crore from Rs 3.57 lakh crore. The share of low-cost current and savings account (CASA) deposits stood at 31 percent, with current account deposits at Rs 31,916 crore and savings deposits at Rs 87,854 crore.

The balance sheet size contracted to Rs 5.27 lakh crore from Rs 5.43 lakh crore a year ago.