IndusInd Bank Q3: Provisions surge even as NII tops estimates, NPAs stay stable

IndusInd Bank reported a sharply improved financial performance for the third quarter (October-December), posting results that comfortably beat Street expectations. The lender reported a net profit of ₹128 crore, much higher than the CNBC-TV18 poll estimate of ₹42 crore. However, on a year‑on‑year (YoY) basis, profit fell 90% from ₹1,402 crore due to elevated provisioning.

Net interest income (NII) for the quarter came in at ₹4,561.7 crore, topping the Street’s forecast of ₹4,353 crore. But NII was 12.7% lower YoY compared to ₹5,228 crore in the year‑ago period.

Asset‑quality trends remained stable. The bank’s gross NPA ratio improved slightly to 3.56% from 3.60% in the previous quarter. The net NPA ratio stood at 1.04%, broadly steady on a sequential basis.

However, provisions saw a sharp rise. The bank reported provisioning expenses of ₹2,095.8 crore, up 20.2% YoY compared to ₹1,743.6 crore in the same quarter last year. The elevated provisioning weighed on bottom‑line performance even as core operations remained resilient.

Beyond profitability, IndusInd Bank’s balance sheet metrics reflected a mixed trend. Deposits stood at ₹3.94 trillion as of December 31, marginally higher than ₹3.90 trillion in the previous quarter but down 4% year on year.

Advances came in at ₹3.18 trillion, lower than ₹3.67 trillion a year earlier. The bank maintained a healthy liquidity coverage ratio of 122% and a provision coverage ratio of 71.50% as of December 31.

Capital buffers remained strong, with the Basel III capital adequacy ratio at 16.94%. Operational metrics softened, as the yield on assets declined to 8.78% from 9.63% a year ago, while the cost of funds eased to 5.26% versus 5.70% in the year ago period.

Commenting on the performance, Rajiv Anand, MD and CEO, IndusInd Bank, said, "During Q3FY26, the Bank continued focus on optimization of its balance sheet by letting go unprofitable loans and deposits along with being cautious on microfinance disbursements. The operating performance was steady with Pre-Provision Operating Profit at Rs2,270 crore growing 11% QoQ. Our asset quality trends have been stable in all core businesses except in microfinance wherein industry is now showing early signs of recovery. Overall, the Bank has returned to profitability with a Profit After Tax of Rs.128 crores. The Balance sheet remains robust with a healthy capital adequacy, excess liquidity and reducing stressed asset pool. We are optimistic about resilient domestic economy and aim to participate in the growth recovery in a calibrated manner."

Shares of IndusInd Bank settled half a percent lower on the NSE, quoting at ₹

898 apiece. The lender's scrip has corrected nearly 5% in the last five days with the one-year return too negative by 7.5%.