This article first appeared on GuruFocus .
Release Date: January 23, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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IndusInd Bank Ltd ( BOM:532187 ) reported an 11% quarter-on-quarter growth in pre-provision trading profit, supported by improved net revenues and disciplined cost management.
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The vehicle finance business saw robust momentum with disbursements increasing by 26%, driven by GST changes and a broad-based pickup across vehicle categories.
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The bank has made significant progress in streamlining its organizational structure and onboarding key leadership positions, which is expected to drive future growth.
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The bank's digital banking app, Indie, has over 2.7 million monthly active users, indicating strong digital engagement.
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The bank's capital adequacy remains healthy with a CET1 ratio of 15.74% and a CRAR of 16.94%.
Negative Points
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Slippages in the microfinance loans remain elevated, impacting overall asset quality.
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Average advances dropped by 2% sequentially, driven by a decline in wholesale banking advances and the micro loan book.
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Provisions remain high due to elevated flows in the microfinance business and write-offs of accumulated NPAs.
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The bank's net NPA remains at 1.04%, with slippages appearing sticky across segments.
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The bank's average deposits dropped by 1%, driven by a reduction in wholesale deposits.
Q & A Highlights
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Q: The net NPA is still at 1.04%, and slippages appear sticky across segments. What are the plans to bring down the net NPA? A: (Rajiv Annan, CEO) We aim to bring down the net NPA to well below 1%, targeting the 60-70 basis points vicinity over time. We are consistent in our provisioning and write-off policies, and as slippages start dropping, the PCR will improve. The focus is on reducing the stress book through write-offs and maintaining stakeholder interests.
Q: Regarding the right-sizing of the balance sheet, when should we expect acceleration in overall loan growth? A: (Rajiv Annan, CEO) Our intent is to grow in line with the market by FY 2027, aiming for a 1% ROA by the end of that year. We are focusing on reducing bulk deposits and low-yielding corporate books, with growth expected in retail and focus segments.
Q: Can you provide more details on the SMA 1 and 2 numbers for microfinance? A: (Rajiv Annan, CEO) The SMA 1 and 2, which is 30 to 90 DPD, is at 2.4% as of December 2025, down from 3.2% in September 2025. This indicates an improvement in early stress indicators.
Q: What is the strategy for the microfinance business under the PACE framework? A: (Rajiv Annan, CEO) Microfinance is critical for profitability and meeting PSL requirements. We are using credit guarantee schemes to eliminate tail risk and aim to maintain the business at 7-8% of our asset side. The focus is on building a predictable and profitable microfinance business.
Q: What are the plans for capital raising, considering the potential impact of ECL transition? A: (Rajiv Annan, CEO) We believe we have sufficient capital for the next 12 to 18 months. The initial ECL impact is estimated between 1.5% to 1.7% of the loan book post-tax. We are focused on getting growth impulses back, especially on the liability side, before considering capital raising.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
