By-Manish Chowdhury, Head of Research, Stoxbox

– Net Interest Income stood at Rs. 5,347 crores in Q2FY25, down 1.1% QoQ / up 5.3% YoY.
– Pre-provision operating profit (PPOP) stood at Rs. 3,600 crores in Q2FY25, showing a de-growth of 8.9% QoQ / up 8% YoY.
– Provisions rose to Rs. 1,820 crores in Q2FY25 from Rs. 1,050 crores in Q1FY25 and Rs. 974 crores in Q2FY24.
– The bank posted quarterly net profit of Rs. 1,331 crores in Q2FY25, down 38% QoQ / down 40% YoY.
– NIM stood at 4.08% in Q2FY25 and was down 17 bps QoQ and down 21 bps YoY.
– Cost to Income ratio stood at 52.2% in Q2FY25 compared to 49.7% in Q1FY25 and 46.9% in Q2FY24.
– Gross NPA stood at 2.11% in Q2FY25 which rose 9bps QoQ and was up 18bps YoY.
– Net NPA stood at 0.64% in Q2FY25, up 4bps QoQ and up 7bps YoY.
– Capital Adequacy Ratio stood at 16.51% in Q2FY25 compared to 17.55% Q1FY25 and 18.21% in Q2FY24.
– Gross Deposits showed a good growth and stood at Rs. 4,12,397 crores in Q2FY25, up 3.5% QoQ / up 14.7% YoY.
– Gross Advances stood at Rs. 3,57,159 crores in Q2FY25, up 2.7% QoQ / up 13.2% YoY.
– RoA declined to 1.00% in Q2FY25 compared to 1.64% in Q1FY25 and 1.90% in Q2FY24.
– CASA stood at 36% in Q2FY25, compared to 37% in Q1FY25 and 39% in Q2FY24.

View:
IndusInd Bank’s performance in Q2FY25 was disappointing, with net profit falling 40% YoY, significantly missing street expectations. The decline in profit was primarily due to rising operating expenses, including higher finance costs, which outpaced the bank’s income growth. Additionally, the bank’s NIM deteriorated during the quarter. In terms of asset quality, both GNPA and NNPA saw deterioration and ROA also declined, though management attributed this to transitory factors. However, the bank remains optimistic about the second half of the fiscal year, anticipating growth in its microfinance and vehicle finance portfolios, which will ultimately improve the asset quality. On a positive note, the bank reported notable growth in advances and deposits, with deposit growth driven by a strategic focus on key market segments. Going forward, key factors to monitor will include improvements in asset quality, control over slippages, and a recovery in NIM. The bank’s management will need to outline a clear strategy to address these challenges and drive future performance.