IndusInd Bank Plunges 15% on Q2 Result

25 Oct 2024 , 12:19 PM

IndusInd Bank’s stock is down 15% due to poor results. The lender surprised the market by reporting a 39% year-over-year (YoY) drop in net profit for the second quarter, which was impacted by stress in the microfinance (MFI) sector, declining margins, and increased provisions for bad loans.

Although they make up 9% of the bank’s loan book, microfinance loans have seen a sharp decline in asset quality. The MFI segment’s gross non-performing assets (NPAs) increased from 5.16 percent in the previous quarter to 6.5 percent in Q2FY25.

IndusInd Bank’s share price has dropped the most in almost five months. On October 25, 2.38 million shares of the lender were traded in a block trade, according to Bloomberg News.

Management highlighted the growing strain on MFI loans on the earnings call, especially in tier-2 and tier-3 cities, although they were cautiously optimistic about a recovery in the upcoming quarters.

In the meantime, the bank’s overall gross non-performing asset ratio increased from 2.49 percent in Q1FY25 to 2.76 percent, showing widespread stress throughout its portfolio.

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