A slow road to recovery for IndusInd Bank in the December 2025 quarter – pressure on NIM, fall in advances and deposits, and a crash in its net profit. A silver lining is provision coverage ratio of 72% in Q3FY26, in tune with regulatory requirements, and provisioning has peaked.
IndusInd Bank corporate office’s recent move reflects the lender’s efforts to stabilise operations and rebuild investor confidence after accounting and asset quality challenges.
It’s been nearly a year since the accounting problems at IndusInd Bank became known and investors have been keen to understand whether the issues have been contained.
Of crucial importance to investors is whether the new management led by Rajiv Anand, Managing Director of the bank, is implementing steps to recover lost ground – in terms of deposits with the bank, loans / advances, provisioning requirements and pressure on net interest margin (NIM).
Even as this potential turnaround plays out, mutual funds have shown their commitment to IndusInd bank – they held a 25.8% stake in the bank at the end of the December 2025 quarter vis-à-vis 23.6% stake at the end of the September 2025 quarter, according to Trendlyne.com.
The bank had declared its third quarter of FY26 results after the close of Friday trading, and in early Tuesday trade the stock was broadly flat at Rs 891. The stock has recovered considerable ground from its 52-week low of Rs 605.4 that was reached on 12 March, 2025.
Q3FY26 – Continuing pressure on NIM and declining advances
Operational performance of IndusInd Bank
| NIM (%) | Loan growth (%) | PCR (%) | Net profit growth (%) | |
| December 2025 quarter | 3.5% | – 13% | 72% | -89% |
| September 2025 quarter | 3.3% | -9% | 72% | n/a |
Source – Investor presentation and quarterly results of IndusInd Bank
IndusInd Bank’s NIM was 3.5% in the December 2025 quarter as compared to 3.9% a year earlier.
Of concern once again is that the bank’s advances dropped 13% y-o-y to Rs 3.17 lakh crore in Q3FY26, according to its investor presentation. IndusInd Bank is under strict supervision of the RBI, given the clean-up effort of its accounting books and operating processes.
Nevertheless, the above decline in the bank’s advances comes at a time when the RBI has taken several steps to lower interest rates and boost lending in the broader banking system over the past several months, including repo cuts. In addition, the central bank over the weekend announced the injection of Rs 2 lakh crore in the banking system in phases.
PSU and private bank’s Q3FY26 quarterly results have highlighted strong growth in retail loans and SME loans in the December 2025 quarter, in a bid to deal with the temporary pressure on NIM. Banks typically charge a higher interest rate for retail and SME loans vis-à-vis loans to top level corporates.
Inspite of what is otherwise a resilient environment for lending, IndusInd bank has seen a YoY de-growth. In the quarter ended September 2025 too, IndusInd Bank’s advances fell nearly 9% y-o-y to Rs 3.25 lakh crore.
Apart from a fall in advances, IndusInd Bank has highlighted its deposits fell 4% y-o-y to Rs 3.93 lakh crore in the December 2025 quarter.
Asset Quality: Provisioning Peaks at 72%
The bank’s provisions were Rs 2,088.6 crore in Q3FY26 as against Rs 1,743.6 crore a year earlier.
A silver lining is that IndusInd Bank has highlighted that its provision coverage ratio (PCR) was 72% in Q3FY26, and similar to levels in September 2025 quarter, broadly in tune with the regulatory requirements.
It does appear that provisioning requirements at the bank have broadly peaked, and investors will be monitoring this parameter very closely over the next few quarters.
Its net NPA (%) was 1.04% in the December 2025 quarter vis-à-vis 0.68% a year earlier.
IndusInd had also seen a sharp jump in its provisions in Q2FY26.
Impact on net profit
The impact of weak NIM, fall in advances and a rise in provisions resulted in IndusInd Bank’s standalone net profit crashing nearly 89% y-o-y at Rs 161.2 crore in December 2025 quarter.
A similar weak trend was witnessed in the September 2025 quarter – the bank then reported a standalone net loss of Rs 444.8 crore in the September 2025 quarter , on account of a surge in provisions.
IndusInd Bank’s core banking operations are reflected in its standalone results.
Efficiency – very weak Return on Assets (RoA)
IndusInd Bank’s return on assets (annualised) was 0.1% in the December 2025 quarter.
Revival plan gains steam and growth outlook
Management Outlook: The Road Ahead
The company has highlighted several top-level appointments in its investor presentation including head of wholesale banking, chief human resources officer, chief data officer, and head of SME banking, among others.
Investors will be closely monitoring the new management team and its progress in restoring various operational parameters of the bank – deposits, advances, NIM and net profit.
The above development comes at a time when the RBI is boosting lending in the broader banking system and lowering the cost of loans / advances.
Can Rajiv Anand Fix IndusInd Bank?
The new management, led by Rajiv Anand, needs to pay particular attention to stabilise and then increase deposits with the bank over the next few quarters – without a strong deposit base it would be impossible for IndusInd Bank to increase its advances, going forward.
Also, the top management has to focus on ramping up loans / advances to retail and SME segments, and this would help the bank to earn a higher rate of interest and deal better with NIM pressure. This strategy has been well implemented by several PSU and private banks in the third quarter of FY26, and it becomes increasingly important for IndusInd Bank to implement a similar strategy.
In addition, the team needs to once again build confidence in customers and shareholders alike by ensuring compliance and corporate governance levels are the very highest.
Clearly, it is a long road to recovery for the new top management of IndusInd Bank.
Valuation: IndusInd vs. Kotak Mahindra
Valuation comparison
| Price to (standalone) book value | |||
| IndusInd Bank | 1.1 | ||
| Kotak Mahindra Bank | 3.2 |
Source – Screener.in
IndusInd Bank trades on a preferred valuation metric – price to (standalone) book value of 1.1 times, according to Screener.in. Over the past 5 years, it has traded on this metric between 0.8 times and 2.3 times.
Larger rival, Kotak Mahindra Bank, on the valuation matrix, price to (standalone) book value, it trades at 3.2 times. Over the past 5 years, Kotak Mahindra Bank has traded at a price to (standalone) book value between 3.1 times and 7.1 times.
Investors can adopt a wait-and-watch attitude for IndusInd Bank stock.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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