IndusInd Bank’s fiscal first quarter standalone net profit tanked 68% year-on-year to Rs 684 crore but the top management assured that the financial impact of past frauds would not be felt any more.

The bank’s chairman Sunil Mehta said the appointment of a new chief executive officer is progressing “per schedule” and changes will also be made in the senior management. Following the loss of Rs 2,000 crore due to years of accounting lapses in its internal derivative trades, IndusInd Bank saw exits of CEO Sumant Kathpalia and deputy CEO Arun Khurana.

The bank has submitted three CEO names for consideration to the Reserve Bank of India (RBI), including Axis Bank deputy managing director Rajeev Anand.

Mehta said the bank is taking stringent cost control measures and the aim is to bring down annual operating expenditure growth to a single-digit figure from the current 20% as it seeks to follow a profitability-first approach. 

In the preceding quarter ended March, the bank reported a loss of Rs 2,236 crore. This was due to the one-off losses booked in the quarter due to accounting irregularities. 

"The financial impact of the legacy issue is now behind us and the leadership transition is well on track," said Mehta in a post-earnings call.

Despite turning around and becoming profitable from the preceding quarter, IndusInd Bank’s pressure on growth, bad loans and microfinance portfolio remains.

The lender’s gross non-performing assets (NPA) ratio worsened to 3.64% as of 30 June 2025, from 3.13% a quarter ago and 2.02% a year ago. 

Net NPA also rose to 1.12%, from 0.95% in the March quarter and 0.60% in the earlier-year period.

The microfinance book continued to hurt, with gross NPAs from this business segment increasing to Rs 5,298 crore from Rs 4,531 crore in the prior quarter. Comprising 8% of the bank’s total loan book, it fell 8% quarter-on-quarter to Rs 28,408 crore. 

Mehta said the bank has taken a cautious approach towards growing the microfinance book. The expectation is that slippages in this segment would stabilise in the third quarter. 

Total bad loan slippages were at Rs 2,567 crore in Q1, almost half the quarter-ago figure of Rs 5,014 crore, with Rs 2,322 crore coming from consumer loans and Rs 245 crore from corporate accounts. 

Write-offs was lower at Rs 664 crore from Rs 1,816 crore while upgrades were at Rs 230 crore as against Rs 216 crore in the previous quarter. Recoveries were at Rs 239 crore, down from Rs 311 crore.

Provisions for bad loans grew 66% YoY to Rs 1,737.78 crore during the April-June quarter.

Provision coverage ratio was at 70% as of 30 June 2025.

The bank's net interest income fell 14% YoY to Rs 4,640 crore in the June quarter.

Net interest margin improved to 3.46% from 2.25% in the March quarter, but was down from 4.25% in the year-ago period.

The bank’s loan book stood at Rs 3.34 lakh crore as of 30 June 2025, down 4% YoY and 3% quarter-on-quarter. The bank said it is looking to moderate its corporate loan book growth.

Deposits at Rs 3.97 crore fell 3% sequentially and stood almost flat YoY. The low-cost CASA (current account savings account) deposits share in the total mix was at 31% as of 30 June 2025, down from 33% in the prior quarter and 37% a year ago.