IndusInd Bank (INDUSINDBK) Q2 FY27 Swings to Profit as Asset Quality Improves
The bank posted a net profit of ₹1,242 crore, a sharp turnaround from last year's loss, but net interest margin contracted amid funding pressures.
IndusInd Bank reported a consolidated net profit of ₹1,242 crore for Q2 FY27, recovering from a loss a year ago. Profitability was supported by lower credit costs and improved asset quality, even as net interest margin faced pressure.
IndusInd Bank’s second quarter marks a clear exit from last year’s cleanup phase. A year after taking a large provision hit to shrink its microfinance book, the bank has returned to profit on the back of a healthier balance sheet and lower credit costs.
The numbers show a recovery in motion. Revenue grew 4.3% from the June quarter to ₹11,796 crore. More significantly, net profit jumped 20% sequentially to ₹1,242 crore, completing a turnaround from a loss of ₹437 crore in the same quarter last year. The net profit margin expanded to 10.5%, a sharp improvement from the negative territory of Q2 FY26.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Period | Sep 2026 | Jun 2026 | Sep 2025 |
| Revenue (₹ Cr) | 11,795.98YoY +1.6% | 11,309.94 | 11,608.63 |
| Profit (₹ Cr) | 1,241.78YoY +384% | 1,037.02 | -436.94 |
| Net Profit Margin (%) | 10.5YoY +376% | 9.2 | -3.8 |
The cost of a cleaner book
Last year’s loss was a strategic choice. Under CEO Rajiv Anand, the bank accelerated write-offs and provisions in its stressed microfinance portfolio, taking a ₹2,631 crore hit in Q2 FY26 alone, as noted by BusinessToday. That painful cleanup is now paying dividends. Provisions fell sharply to ₹1,223 crore this quarter, according to Kotak Neo.
This drove a dramatic improvement in asset quality. The gross NPA ratio fell to 2.73% from 3.60% a year ago, while net NPAs improved to 0.83% from 1.04%, as reported by CNBC-TV18. With credit costs easing, profit could flow to the bottom line.
Growth returns, but margins tighten
Business momentum is rebuilding. Net advances grew 11.2% year-on-year to over ₹3.6 lakh crore, while deposits rose 10.1%, according to an NDTV Profit business update. However, this growth came with a squeeze on the core lending margin.
The net interest margin (NIM) declined to 3.23% from 3.32% a year ago, as per BusinessToday. Management attributed part of this pressure to the mobilisation of foreign currency deposits, which lifted funding costs. While net interest income rose a modest 4% year-on-year, it fell 2% sequentially.
The road to sustained profitability
For the recovery to hold, loan growth must translate into stable margins. The bank expects acceleration in its vehicle finance and microfinance disbursements from this quarter onward, as highlighted in an ET BFSI report. Success here would help offset margin pressure with higher-yielding assets.
The valuation, at a P/E of 65.9, prices in a full recovery and then some, trading at a steep premium to the industry. Investors are betting the worst is over, but the stock’s reaction—closing down 1.76% on results day, according to CNBC-TV18—suggests some are waiting for margin stability to match the improved asset quality.
Key Points
- IndusInd Bank reported a net profit of ₹1,242 crore for Q2 FY27, a complete turnaround from a loss of ₹437 crore in the same quarter last year.
- Profitability was buoyed by a sharp fall in provisions to ₹1,223 crore, driven by improved asset quality with gross NPAs down to 2.73%.
- Net interest margin contracted to 3.23% due to higher funding costs, even as loan growth rebounded strongly at 11.2% year-on-year.
- The bank is betting on a pickup in higher-yielding retail segments like vehicle finance and microfinance to support margins in the coming quarters.
Hexa Perspective
The quarter confirms the bank has moved past its balance-sheet repair stage. The cleanup of the microfinance book, while costly last year, has created a cleaner slate from which to grow.
The path ahead hinges on a delicate balance. Strong loan growth is positive, but if it continues to rely on higher-cost deposits, margin pressure could persist. The bank’s ability to regain traction in its core retail lending franchises will determine if this profit recovery is the start of a sustained upcycle or just a post-cleanup bounce.
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