IndusInd Bank Q2 Outlook: Profits likely to fall sharply due to weak government bond income and MFI stress. 8 things to watch

IndusInd Bank is expected to report a sharp decline in Q2FY26 profits as brokers foresee pressure on margins, weak state revenues and high provisioning from the microfinance and commercial vehicle segments.

Estimates from four brokerages put net profit at between Rs 240 crore and Rs 796 crore, implying a year-on-year decline of up to 82% in the quarter ended September. The lender’s net interest income (NII) could also fall sharply to 21% between Rs 4,200 crore and Rs 4,469 crore.

Analysts also see moderate growth in loans and deposits and expect the new CEO’s commentary on the bank’s short-term strategy to be a key area of ​​focus.

Estimates from Nomura, Emkay Research, ICICI Securities and Yes Securities have been taken into account.

The results will be announced on Saturday, October 18 and here’s what brokers expect from IndusInd Bank across these 8 key performance metrics:

PAT

Brokers expect a sharp decline in IndusInd Bank’s profits in the second quarter of 2026 due to higher provisioning and weak treasury performance. Nomura expects PAT of Rs 240 crore, down 82% year-on-year and 61% quarter-on-quarter, citing higher credit costs and subdued treasury income. ICICI Securities pegs PAT higher at Rs 796 crore, up 16.4% YoY but down 40% QoQ.

Emkay estimates PAT at Rs 434 crore, down 67.4% year-on-year and 28.1% quarter-on-quarter, and warns that the bank could even incur losses if management accelerates provisioning.

Yes Securities expects PAT of Rs 729 crore, down 45% YoY but up 6.5% QoQ, ahead of a sequential recovery in profitability.

SO

Nomura: Rs 4,200 crore (–21% YoY, –9% QoQ)

ICICI securities: Rs 4,469 crore (-3.7% YoY, -16.4% QoQ)

Emkay: Rs 4,386 crore (-18% YoY, -5.5% QoQ)

Yes Securities: Rs 4,705 crore (–12% YoY, +1.4% QoQ)

Across brokerage houses, NII is expected to remain under pressure due to sluggish loan growth and rising deposit costs.

NIM

The NIMs or Net Interest Margins are expected to shrink sequentially due to the diminishing impact of one-off benefits from previous quarters.

Nomura: 3.3%, down 83 bps year-on-year and 21 bps quarter-on-quarter

ICICI securities: 3.39%, down 69 bps year-on-year and 7 bps quarter-on-quarter

Emkay: 3.3%, down 76 bps year-on-year and 14 bps quarter-on-quarter

Nomura noted that, adjusted for one-off events, the underlying NIM decline is approximately 10 basis points quarter-on-quarter.

Also read: HDFC Bank Second Quarter Results Outlook: PAT could grow up to 9% YoY, NII could rise up to 6% due to margin squeeze. 9 metrics to track

PPPOP

Operating profitability is expected to weaken due to lower government bond income and higher costs.

Nomura: Rs 1,940 crore (–46% YoY, –24% QoQ)

ICICI securities: Rs 2,565 crore (-3.3% YoY, -28.6% QoQ)

Emkay: Rs 2,379 crore (-33.9% YoY, -7.3% QoQ)

Yes Securities: Rs 2,274 crore (-36.7% YoY, -14.3% QoQ)

Facilities and derailments

Nomura: Provisions at Rs 1,630 crore, down 11% YoY and 8% QoQ; credit costs at 1.9%.

Emkay warns that the bank could accelerate provisioning, which could further impact profitability. It expects provisioning to remain high due to ongoing tensions in the MFI and CV segments.

ICICI Securities: Rs 2,150 crore, up 19.6% YoY and down 16.2 QoQ

Loans and deposits

Loan and deposit growth is expected to remain tepid.

Nomura: Loans of Rs 3.27 lakh crore are down 8% YoY and 2% QoQ, while deposits at Rs 3.89 lakh crore are down 5% YoY and 2% QoQ.

ICICI Securities: Advances of Rs 3.27 lakh crore, down 8.3% YoY and 1.9% QoQ.

Yes Securities expects credit growth of around 2% quarter-on-quarter, supported by higher returns on advances.

Also Read: ICICI Bank Q2 Preview: Earnings Growth Up To 8.5% YoY; The NII can increase by 10% as NIMs shrink. 9 things to watch

Credit costs

Credit costs are likely to remain high at around 1.9%, but could gradually decline, according to Nomura. Weak asset quality trends in MFI and retail portfolios remain a concern.

Important monitorables

Brokers have turned their attention to management comments from the new CEO on the bank’s growth roadmap. Stress in MFI and CV portfolios and its impact on slippages will be another key focus.

Be aware of sequential trends in loan and deposit growth, especially retail growth.

(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)