IndusInd Bank shares rebound after falling nearly 6% in early trade

New Delhi: Shares of IndusInd Bank on Thursday bounced back after tumbling nearly 6 per cent in early trade following the firm reporting a Rs 2,329 crore loss for the March quarter, its worst performance ever, as the interim management opted to go for a deep-clean exercise beyond recognising the impact of wrong accounting practices.

After a weak start to the trade, the stock further tanked 5.89 per cent to Rs 725.65 on the BSE. However, later the stock bounced back and traded 2.75 per cent higher at Rs 792.30.

At the NSE, the company's stock tumbled 5.73 per cent to Rs 725.80 during the early trade. Later, it recovered all the lost ground and quoted at Rs 794.90, up 3.24 per cent.

The fresh slippages galloped to Rs 5,014 crore, largely due to the microfinance book, where a Rs 1,800-crore incorrectly classified stress was unearthed and reported as a gross non-performing asset, and also some stress in the two-wheeler segment.

The company's earnings were announced post-market hours on Wednesday.

Starting with a March 10 disclosure about a potential hit to the networth because of incorrect recognition of derivative trades over the last two years, the last two months have been tumultuous for the Hindujas-promoted lender, and have also witnessed the immediate resignation of chief executive Sumant Kathpalia and his deputy Arun Khurana amid allegations of insider trading as well.

In the March quarter, the bank took impact of all the irregularities brought to the notice, including a Rs 1,960 crore hit from incorrect recognition of derivative trades, cumulative interest income reversal of Rs 674 crore due to incorrect accounting, disclosed a Rs 172 crore fraud where employees had led it to incorrectly classify the amount as fee income under the microfinance business, set off Rs 595 crore of incorrect manual entries posted as "Other Assets" and "Other Liabilities" in the past, and also recognised the higher slippages.

Its management, now led by veteran banker Sunil Mehta in a non-executive role, affirmed that all the shortcomings have been taken on board and sought to assure that there will not be any trouble in the future as it goes about "reinvigorating" the bank.

Mehta said based on the reviews that have been done, all the issues have been duly identified, addressed and disclosed to all the stakeholders.