IndusInd Bank is targeting a 1% return on assets (RoA) by the end of fiscal year 2027 (FY27), marking the first milestone in its recovery after microfinance and governance problems eroded growth and profitability. At June-end, annualized RoA stood at 0.78%, or 0.63% after adjusting for interest on tax refunds. According to reports from Mint, reaching 1% RoA would signal a stabilization of the balance sheet, improved underlying profitability and recovery from its governance challenges. No comparable large private bank, except IndusInd, currently has an RoA below 1%.
The June quarter (Q1FY27) results offered the first clear sign that IndusInd's operating performance was beginning to turn. Consolidated net profit jumped 75% sequentially to ₹1,037 crore, helped by a return to positive loan growth and improving asset quality. After five consecutive quarters of decline, loans grew 3.3% sequentially to ₹3.26 trillion, driven by the corporate segment, while retail was flat and SME declined. Provisions fell 7% quarter-on-quarter, with gross non-performing assets improving from 3.43% to 3.25%, while net NPA declined marginally from 1% to 0.95%. The deposit franchise also strengthened with retail deposits rising 4% sequentially, taking their share of total deposits to a record 49.5%.
The operational recovery is a marked shift from where IndusInd stood just over a year ago. On 11 March 2025, a disclosure about discrepancies in the bank's derivatives portfolio sent the stock tumbling 27% in a single day to ₹655.95 on the National Stock Exchange. The eventual adjustment amounted to ₹1,960 crore—more than 2% of the bank's net worth. A forensic review by Grant Thornton found gaps in internal controls and extensive reliance on manual accounting processes, with subsequent findings revealing communications dating back several years, suggesting management had been aware of the lapses for 15 months before they were disclosed.
The bank has significantly expanded its co-lending partnerships to strengthen its business model and reduce concentration risk. IndusInd now partners with top 14 banks and financial institutions including Bank of Baroda, HDFC Bank, Union Bank of India, State Bank of India, Bank of India, Punjab & Sind Bank, Indian Bank, ICICI Bank, Axis Bank, Yes Bank, HDB Financial Services and Indian Overseas Bank. The company achieved H119,097 million in volumes by March 2026, up from H105,519 million in the previous year, demonstrating successful execution of its granular lending strategy. This diversified approach has helped the bank reduce dependence on any single lender while maintaining strong relationships with established financial institutions.
