Q4FY25 loss reflects full impact of accounting irregularities, says IndusInd Bank

IndusInd Bank reported a consolidated net loss of Rs 2,239 crore for Q4FY25

IndusInd Bank reported a consolidated net loss of Rs 2,239 crore for the March quarter (Q4FY25), following a series of accounting lapses and discrepancies related to derivatives. During the post-earnings conference call, Chairman Sunil Mehta stated that all financial irregularities have been fully accounted for in the fourth quarter.

“The financial impact of all the above has been fully taken in the audited financial statements of the bank for the financial year 2024-25. The bank's approach towards financials has been to start FY25-26 on a clean slate without carrying forward any of the past issues,” Mehta said.

The internal review found that interest income and fee income were incorrectly recorded over the first three quarters of FY25. It also revealed that certain microfinance loans were misclassified, resulting in under-provisioning and non-recognition of non-performing assets (NPAs) amounting to Rs 1,885 crore.

Additionally, the review identified unsubstantiated balances in the “other assets” and “other liabilities” accounts. It also found that about Rs 760 crore was wrongly classified as interest income instead of being shown under other income.

Based on these findings and reports submitted to the board, the bank suspects a case of fraud involving certain employees who played a key role in accounting and financial reporting. The bank has initiated steps under applicable laws, including reporting to regulatory authorities and investigative agencies. It is also working to fix accountability for those responsible.

Despite these issues, the management said the bank’s balance sheet remains healthy. As of the end of March, the capital adequacy ratio stood at 16.24 percent, provision coverage ratio at 70 percent, and the average liquidity coverage ratio at 118 percent, with excess liquidity of Rs 39,600 crore.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.