Shares of Indusind Bank Ltd tumbled 20% on Tuesday after the bank discovered discrepancies in its derivatives portfolio during an internal review. The detailed review revealed that the bank’s total assets are estimated to be adversely impacted by about 2.35% by December 2024, equivalent to a potential loss of Rs 1,530 crore. The bank’s total assets stood at Rs 65,102 crore at the end of December 2024.
Indusind Bank’s total assets are estimated to decline by Rs 1,600 crore to Rs 2,000 crore. The Hinduja-promoted lender plans to absorb this loss in its fourth quarter earnings or the first quarter of the upcoming financial year, company officials revealed on Monday. This comes after the resolution of accounting anomalies related to multi-year derivative transactions.
In the previous session, the stock closed 3.86% lower at Rs 900, hitting a 52-week low of Rs 886.40 on the BSE. A total of 4.49 lakh shares were traded, generating a turnover of Rs 40.47 crore.
The market capitalisation of the bank fell to Rs 70,161 crore, with the stock trading below the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day and 200-day moving averages. Indusind Bank stock has declined 42.42% in the last one year and 37.24% in the last six months. Regarding the CEO’s tenure, Nuvama Institutional Equities noted that the board had applied for a three-year term, but the approval was only for one year.
The move is being viewed negatively, with Nuwama suggesting that the bank will likely use this one-year period to appoint a new CEO. This comes after IndusInd Bank’s CFO recently resigned just ahead of Q3FY25 earnings.
On the anomalies in its derivatives portfolio, the bank said it has appointed a reputable external agency to independently review and verify the findings, though it did not disclose the nature of the anomalies. The bank reassured that its profitability and capital adequacy remain strong enough to absorb the “one-time impact”.