IndusInd Bank's real worry is corporate loans, not ₹2,300cr loss
What's the story
IndusInd Bank reported a net loss of ₹2,328 crore for the March quarter, its first quarterly deficit in nearly two decades.
But the Mumbai-based private lender is dealing with a bigger problem: its corporate loan book.
Despite being a key revenue driver due to large ticket sizes and fees, the sector has witnessed growth slow down as corporates look for alternative funding routes like equity and debt markets.
Corporate loan downturn
IndusInd Bank reports significant decline in corporate loan book
Notably, in the latest quarter, IndusInd Bank became the only lender to report a decline in its corporate loan book both sequentially and year-on-year (YoY).
This is especially worrying considering that the State Bank of India, India's largest lender, witnessed a 5.5% growth in its corporate loan book during the same period.
The 15.7% sequential drop in IndusInd's corporate loan book for the January-March period is unprecedented within this sector.
Trust questioned
Decline in corporate loan book raises questions about trust
The contraction in IndusInd Bank's corporate loan book in the fourth quarter of a financial year, usually a robust business quarter, begs the question of whether it is losing corporates' trust.
After announcing its net loss and falling corporate loan book, IndusInd Bank's shares opened 5% lower on Thursday, only to recover and trade 3% higher.
However, the gains were short-lived as the stock eventually traded below the flat line.