MUMBAI: IndusInd Bank may have reported a headline-grabbing Rs2,328 crore net loss for the March quarter – its first in nearly 20 years – but what truly caught investors off guard was something less visible: a sharp and unusual drop in its corporate loan book.
In a quarter that’s typically the strongest for credit offtake, the bank’s corporate advances shrank by a staggering 15.7 per cent sequentially – an anomaly not seen among peers or even in previous downcycles.
In contrast, most other banks, including the country’s largest lender, SBI, reported healthy corporate loan growth during the same period.
Corporate loans have long been prized by banks for their chunky size and the lucrative fees they bring in. They also serve as a barometer of institutional trust in a bank.
That IndusInd’s corporate book shrank both quarter-on-quarter and year-on-year – the only private lender to report such a contraction – raised red flags.
The drop raises uncomfortable questions: Have top-rated corporates turned cautious about borrowing from IndusInd Bank? Or worse, have they taken their business elsewhere?
Derivative contract provisioning at RsRs2,156cr.
But the real twist in the tale – and what arguably turned investor sentiment – was the revelation of a lapse involving a derivatives contract that triggered a one-time provisioning hit of Rs2,156 crore.
The bank failed to provide for a mark-to-market loss on a structured foreign exchange derivative product in the December quarter.
That miss came to light only now, compounding concerns about governance and risk management oversight.
The market’s reaction was telling. IndusInd Bank shares opened 5 per cent lower on Thursday, clawed back into the green briefly, but later erased all gains to trade in the red again – mirroring the seesawing investor confidence.
More than just a bad quarter, IndusInd’s results have sparked questions about deeper cracks in its corporate banking lever – and its internal controls.
