A day after plunging 27 per cent, shares of IndusInd Bank Ltd are in focus on Wednesday after the CEO Sumant Kathpalia at the private lender reportedly said that his bank was looking to offset the losses, arising due to accounting discrepancy in valuations of past derivatives transactions, within the March quarter itself. Kathpalia suggested that the fourth quarter as well as the full year will likely have profit figures.
This is a few analyst projections earlier that even hinted at losses in the March quarter. The delayed disclosure on accounting discrepancy spooked investors, as analysts noted that such a development has the potential to unnerve stock investors more than a back-dated non performing loan (NPL).
The IndusInd Bank CEO told CNBC-TV18 that the bank identified the anomaly on October 24 and immediately began an internal review, along with bringing in an external agency. He explained that at that time, the bank was unsure of the full scale of the anomaly, which had developed over a span of 7 to 8 years.
"We discovered the anomaly around October 24, and that's when we began our internal assessment and engaged an external agency. We didn't yet know the full extent of the impact. Once we understood it, we convened a board meeting and made the necessary disclosures," he said.
He emphasized, "The bank has been fully transparent with all disclosures and has not withheld any information. This is a one-time issue, not a recurring one, and we expect to resolve it within this quarter. Moving forward, you'll see the growth and profitability that the bank is accustomed to."
Five out of six Hinduja group stocks settled lower on Tuesday, eroding nearly Rs 21,000 crore in market capitalisation (m-cap).
Promoter Ashok Hinduja via CNBC-TV18, meanwhile, asked shareholders not to panic, saying the problem was neither identified by the auditor nor the regulator, but the IndusInd Bank management itself. He reportedly said that promoters are waiting for approval from the RBI to increase their stake in the bank from 15 per cent to 26 per cent and as early as the lender gets the RBI approval, it would immediately inject capital into the bank.
On Tuesday, IndusInd Bank shares fell 27.17 per cent to settle at Rs 655.95 on BSE. Ashok Leyland settled the day at Rs 200, down 3.24 per cent. Hinduja Global Solutions Ltd dropped 3.68 per cent to Rs 500. GOCL Corporation Ltd tanked 3.48 per cent to Rs 281.10. Gulf Oil Lubricants India Ltd was the only group stock that settled higher. It was up 2.29 per cent at Rs 1216. "We have seen IndusInd Bank for the last 30 years. It has seen various problems. Those have been handled properly. This problem will also get resolved," CNBC-TV18 reported Hinduja as saying.
Hinduja as per CNBC-TV18 called the problem as routine and admitted the concern why they were not informed earlier. Banking businesses are based on integrity and trust, he reportedly said.