IndusInd Bank Shares Fall Most On Record As Reassurances Fail To Calm Investors
Indusind Bank Ltd. said rumours about the bank’s financial health are totally misplaced, motivated and not based on facts as it tried to quell speculation triggered by Yes Bank Ltd.’s rescue about the financial health of smaller private lenders.
The deposit business of the bank—both retail and corporate—is steady, the lender said in a late-night exchange notification on Tuesday. Only a few state governments have made withdrawals, it said, adding that the bank is financially strong, well-capitalised, profitable, and a growing entity with strong governance.
Indusind Bank’s shares have tumbled since March 5 as the government’s decision to place struggling Yes Bank under moratorium. It is the second lender to have come out with a statement to allay concerns in 10 days after RBL Bank Ltd. earlier issued a similarly-worded clarification.
“A couple of state government entities have made withdrawals amounting to less than 2 percent of our total deposits,” the IndusInd Bank statement said. “We are engaging with them to reiterate the stance of the regulator that government deposits in all private sector Banks is safe.”
The central bank had last week advised state governments to not move their deposits from private sector banks to public sector peers due to fears that private lenders are on a weak footing.
RBI Governor Shaktikanta Das, State Bank of India Chairman Rajnish Kumar and Yes Bank Administrator Prashant Kumar also reassured Yes Bank depositors that their money is safe and one need not rush to withdraw funds once the moratorium is lifted. The government will lift its moratorium on Yes Bank today.
On asset quality, IndusInd Bank said it:
- Expects current-quarter gross non-performing assets to be pretty much in line with that of last quarter which was 2.18 percent.
- Expects our net NPA of 1.05 percent as of last quarter to fall below 1 percent, in line with our ambition to take provision cover beyond 60 percent.
Sector-wise highlights at the end of February:
- Real estate developer (commercial and residential) book had zero gross NPA. For Q2 FY20, there was no mention of gross non-performing loans in the segment. However, the bank had mentioned in the investor presentation that its real estate exposure stood at 3.8 percent of the corporate loan book and the special mention accounts stood in the segment at Rs 28 crore.
- Gems and jewellery financing portfolio had zero Gross NPA as on February. No mention of gross non-performing loans for second quarter specific to the segment, but the exposure to the sector is 3.73 percent.
- Commercial vehicle and microfinance portfolios remain steady and range-bound. Commercial vehicles and microfinance gross non-performing assets stood at 1.43 percent and 0.94 percent, respectively, at the end of second quarter.
On Wednesday, IndusInd Bank shares fell as much as 37.96 percent, the most since listing on Feb. 2, 1998, to Rs 374.80 apiece but pared some of the losses to end the day 23.73 percent lower at Rs 460.80.