Asset quality risk, a worry for IndusInd

Amid headwinds, the bank faces uncertainty over CEO extension

- MANOJIT SAHA

A ₹525-crore contingency provision during the July-September period led to a 19 per cent fall in IndusInd Bank's share price on Friday (October 25). Contingency provisions are generally made when a lender expects more bad loans in the coming quarters. Shares of the bank on Tuesday declined 1.53 per cent to settle at ₹1,038.2 apiece on the BSE.

Fresh additions to non-performing assets (NPAs) were ₹1,798 crore, which resulted in gross non-performing assets (gross NPAs) increasing to ₹7,639 crore or 2.11 per cent of gross advances, up from 2.02 per cent in the preceding quarter.

"IndusInd Bank reported yet another soft quarter with weakness on multiple fronts reflecting persistent niggles. The only silver lining was the endeavour to strengthen the balance sheet by creating ₹5 billion contingency provisions, but the timing is questionable given the weak core performance quarter," Elara Capital said in a note.

Increase in gross NPA was almost across the consumer banking book—commercial vehicle, credit cards, tractor financing.