IndusInd Bank eyes FY27 growth reset after crisis-hit year as profit returns in March quarter

MUMBAI: IndusInd Bank expects to return to industry-aligned growth in FY27 after a year of repair work following accounting issues in its derivatives portfolio and stress in its microfinance book, managing director and chief executive Rajiv Anand said on Friday.

“The derivatives issue is behind us and it's been fully accounted for. We have been guiding that 2026-27 is when we transition to a growth mindset and we believe that this year should be, when we start to grow broadly in line with the market, both on assets as well as on liabilities,” Anand said during the March quarter earnings conference call.

For the quarter ended March, the bank’s loan book fell 8% year on year to ₹3.15 trillion, while deposits declined 3% to ₹3.99 trillion. A sharp reduction in provisioning and improving asset quality helped the bank return to profit.

Net profit stood at ₹594 crore compared with a loss of ₹2,329 crore a year earlier. In the December quarter, profit after tax was ₹128 crore.

The recovery follows a difficult period marked by accounting discrepancies in the derivatives portfolio and stress in the microfinance book, which eroded investor confidence and triggered leadership changes. Former managing director Sumant Kathpalia and deputy chief executive Arun Khurana exited as the bank undertook governance and risk-control corrections.

Anand, appointed managing director and chief executive in August 2025, said the focus remains on calibrated expansion. “We consciously prioritize prudence over pace, ensuring that growth is aligned with risk-adjusted returns rather than short-term expansion,” he said in the backdrop of the ongoing war in West Asia.

Private banks have turned cautious on near-term growth prospects, with HDFC Bank and ICICI Bank refraining from offering guidance last week.

On 20 April, Mint reported that while domestic demand trends have been robust so far, war-related tensions cloud visibility on future growth and lending, especially to small and medium enterprises and export-oriented companies.

On its post-earnings media call on 18 April, HDFC Bank managing director and chief executive Sashidhar Jagdishan said it would be difficult to predict the future pace of growth given the war even though expansion is expected to continue.

Anand said IndusInd Bank is not currently seeing a material impact on its loan portfolio, but added that prolonged disruption could affect specific industries, particularly those dependent on physical oil and gas supplies such as ceramics and fertilizers.

He said large corporates are likely to remain resilient due to strong balance sheets and low leverage, while mid-sized corporations and small and medium enterprises are more exposed to external shocks.

On its microfinance portfolio, Anand said collections have stabilised, overdue buckets have declined sharply and fresh slippages are lower.

“With this stabilization in place, we have begun scaling disbursement gradually and expect the coming year to be one of calibrated growth rather than contraction in this segment,” he said.

The bank’s microfinance book fell 42% year on year to ₹16,782 crore at the end of the March quarter.