IndusInd Bank , one of India's leading private sector banks, has been navigating through choppy waters, marked by significant shifts in its shareholding pattern and a series of crises over the past year. The bank's journey through these challenges offers a compelling narrative of institutional investor movements and retail investor interest amid corporate turmoil.

CEO Selection Process Update

IndusInd Bank Chairman Sunil Mehta has confirmed that the CEO selection process remains on schedule. The bank submitted its recommendations to the Reserve Bank of India (RBI) by the June 30 deadline, and the RBI is currently reviewing the proposals for approval. Media reports suggest that frontrunners for the position include:

• Anup Saha (recently resigned MD of Bajaj Finance)
• Rajiv Anand (Deputy MD at Axis Bank)
• Rahul Shukla (former HDFC Bank group head)

A committee of two senior executives is managing the bank until August 28, extended from the original July 28 deadline.

Leadership Transition and Accounting Controversy

The need for new leadership follows the resignations of MD and CEO Sumanth Kathpalia and Deputy CEO Arun Khuranna in April. These departures were prompted by a derivatives accounting controversy that involved senior officials overriding internal controls and concealing information from the board and auditors.

Dramatic Shifts in Shareholding Pattern

Over the last four quarters, IndusInd Bank has witnessed a notable reshuffling of its shareholder base:

The retail investor count has surged 70% to 6.72 lakh investors.

Crisis Unfolds: A Series of Setbacks

The bank faced multiple challenges that likely contributed to the shareholding changes:

1. Accounting Discrepancies: Surfaced in mid-March, raising concerns about financial reporting integrity.
2. Leadership Exodus: Experienced resignations at the top level, creating uncertainty about the bank's direction.
3. Regulatory Scrutiny: Underwent forensic investigations and insider trading probes, further eroding investor confidence.
4. SEBI Action: The Securities and Exchange Board of India (SEBI) barred CEO Sumant Kathpalia and four other officials from participating in the securities market.

Financial Performance

Despite recent challenges, IndusInd Bank reported a standalone net profit of Rs 684.00 crore in the June quarter, recovering from a Rs 2,236.00 crore loss in the previous quarter.

Looking Ahead

The bank's board has aligned on five focus areas to address current challenges and improve performance:

1. Improving profitability
2. Tighter cost control
3. Sharper recovery efforts
4. Strengthening brand identity
5. Deeper stakeholder engagement

As IndusInd Bank works to address these challenges, the contrasting movements of institutional investors present an intriguing dynamic. While mutual funds have reduced their exposure, the increased interest from FPIs and retail investors suggests a complex market sentiment towards the bank's future prospects.

The appointment of a new CEO, pending RBI approval, will be a crucial step in the bank's efforts to regain market confidence and navigate through its current difficulties. Stakeholders will be keenly watching how the bank addresses its governance issues and works towards financial recovery in the coming quarters.

IndusInd Bank , one of India's leading private sector banks, has reported its financial results for the fourth quarter, revealing significant challenges in its performance. The bank posted a consolidated net loss of Rs 2,329 crore, marking a stark contrast to its profitability in previous quarters.

Key Financial Highlights

• Net Loss: Rs 2,329 crore
• Revenue: Rs 11,342.60 crore, down 22.87% year-on-year
• Net Interest Income: Estimated 22-25% decline year-on-year
• Earnings Per Share (EPS): -Rs 29.90, compared to Rs 30.19 in the same quarter last year

Factors Impacting Performance

Elevated Provisioning

The bank's performance was significantly impacted by elevated provisioning, particularly due to stress in its microfinance institution (MFI) portfolio. Analysts had projected a 71% year-on-year increase in provisions, which appears to have materialized, contributing to the substantial net loss.

Loan and Deposit Growth

• Loan Growth: Expected to contract 3-4% year-on-year
• Deposit Growth: Anticipated to remain flat to slightly positive

Credit Costs

Credit costs are reported to have increased significantly, with some estimates projecting a rise to 2.1%. This surge in credit costs has put additional pressure on the bank's profitability.

Operating Performance

• Operating Profit: Rs 3,863.70 crore, down 48.10% year-on-year
• Operating Profit Margin (OPM): 36.33%, compared to 61.03% in the same quarter last year

Income Statement Analysis

Looking Ahead

As IndusInd Bank navigates through these challenging times, investors and analysts will be closely monitoring several key areas:

1. Asset quality trends, particularly in the MFI portfolio
2. The bank's ability to mobilize deposits
3. Governance developments following the previous quarter's challenges
4. Strategies to improve net interest margins and overall profitability

The bank's management is expected to provide further insights into these areas and outline their plans to address the current challenges during their upcoming earnings call.

This quarterly result underscores the significant headwinds faced by IndusInd Bank, reflecting broader challenges in the banking sector, particularly in the microfinance segment. The bank's ability to manage its asset quality, control credit costs, and improve its core banking performance will be crucial in the coming quarters as it seeks to return to profitability.