IndusInd Bank Loans Decline Fourth Quarter, Lagging Peers

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AuthorVihaan Mehta|Published at:
IndusInd Bank Loans Decline Fourth Quarter, Lagging Peers
Overview

IndusInd Bank reported a 2.2% sequential drop in loans for the fourth quarter, marking four consecutive quarters of decline. While deposits saw a slight increase, the bank's growth trails competitors like HDFC Bank and Kotak Mahindra Bank, which posted robust loan expansion. The persistent pressure on lending growth follows past governance concerns and a significant accounting hit.

IndusInd Bank Faces Fourth Consecutive Loan Dip

IndusInd Bank on Monday disclosed a sequential decline in its loan portfolio for the fourth straight quarter. Loans contracted by 2.2% from the previous quarter during the October-December period. This marks a significant growth challenge for the private sector lender.

Deposit Growth Trails Loan Decline

While loans fell, deposits managed a marginal increase of 1.1% quarter-on-quarter. However, the year-on-year figures present a starker picture, with loans down 13.1% and deposits falling 3.8%. This performance stands in contrast to major rivals.

Peers Show Stronger Credit Demand

Lenders such as HDFC Bank and Kotak Mahindra Bank reported double-digit year-on-year loan growth for the same quarter. This indicates a broader rebound in credit demand across India, a trend IndusInd Bank is not currently mirroring.

Lingering Governance Concerns

The bank has been under scrutiny since reporting a $230 million financial hit for the year ending March 31, 2025. This was attributed to misaccounting in internal derivative trades. The incident raised governance questions and led to the resignation of its CEO and deputy chief.

Management and CASA Ratio

Veteran banker Rajiv Anand assumed leadership in August after regulatory approval from the Reserve Bank of India. Despite an eventual recovery in share price post the accounting disclosure, loan and deposit growth has remained sluggish. The bank's Current Account and Savings Account (CASA) ratio, a key metric for low-cost deposits, decreased to 30.3% from 30.7% in the prior quarter and 34.9% a year ago.

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