IndusInd Bank Shares Sink 38% On Failing To Ease Investor Concerns

Shares of IndusInd Bank fell as much as 38 percent on Wednesday, its biggest fall ever, to be dragged to a low of Rs 374.80 on NSE even after the private lender issued a statement assuring its investors that the bank is "financially strong, well-capitalized, profitable, and a growing entity with strong governance."

The decline is sharp in the backdrop of the Supreme Court's verdict on AGR dues of telecom companies on Wednesday.

IndusInd Bank: Quotes, News

BSE 785.956.75 (-0.86%)

NSE 786.207.5 (-0.95%)

In a statement titled "lnduslnd Bank statement on irresponsible rumours and speculation," issued late on Tuesday, the Pune-based private bank said that the "market rumours about individual exposures doing the rounds are bloated and outlandish and nowhere near the truth. The Bank makes full disclosures every quarter on its loan book Profile."

Speaking of sector-wise exposure, it said, "According to reports, relief measures for the telecom sector are under process of approval. This is a significant positive step and we await further decisions / details in this matter."

The bank has been facing serious correction in its stock value after the Yes Bank crisis has raised worries that smaller private sector banks could face some deposit flight. There have also been jitters specific to the bank on asset quality and the leadership transition.

Current managing director and CEO Romesh Sobti is due to retire this month and will be replaced by Sumant Kathpalia, the head of consumer banking.

"Induslnd Bank is committed to all its stakeholders and we would urge all our stakeholders to not believe unsubstantiated information and mischievous rumours," the bank issued statement said.

"Last quarter the Bank's Gross NPA at 2.18% was the 2nd lowest in the industry amongst large private sector Banks. We expect current quarter Gross NPA to be pretty much in line with that of last quarter. We expect our Net NPA of 1.05% as at the last quarter to fall below 1%, in line with our ambition to take provision cover beyond 60%."

It added that as of the end of February 2020, the bank's Real Estate Developer (Commercial & Residential) book had zero Gross NPAs, Gems and Jewellery financing portfolio had zero Gross NPAs and Commercial Vehicle and Microfinance portfolios remain steady and range-bound.

Last week, Uddhav Thackeray-led Maharashtra government mandated all its departments to shift their accounts from private to state-run banks. This instruction was issued by the state government's finance ministry despite RBI writing to the states to not transfer their deposits out of private sector banks, citing misplaced apprehensions about the safety of deposits with private lenders.