Ind Bank Derivatives Portfolio Discrepancy

• Stock Performance
  • Shares surged 7.12% on April 16 to ₹788.25 on the BSE
  • Rebounded nearly 24% from the March 25 low of ₹637.30
  • Rally followed positive external audit findings
• PwC External Review Findings
  • Discrepancies in derivatives portfolio estimated at ₹1,979 crore (as of June 30, 2024)
  • Post-tax impact: 2.27% of net worth (₹65,102 crore as of Q3FY25)
  • Lower than internal review estimate of ₹1,580 crore (2.35% of net worth)
• Analyst Insights
  • Macquarie Capital: Impact is “incrementally positive” as it aligns closely with prior estimates
  • Focus now shifts to:
    • Outcome of forensic audit report by another external agency
    • Root cause analysis of the discrepancies
    • Clarity on management succession plans
• Leadership and Governance
  • RBI granted only a 1-year extension to MD & CEO Sumant Kathpalia
  • The board had recommended a full 3-year term
  • Kathpalia hinted the RBI’s decision may be linked to the portfolio issue
• Market Sentiment and Future Focus
  • Citi note: PwC’s report confirms marginally lower impact than internal findings
  • Investor attention now on:
    • Completion of the forensic audit
    • RBI’s governance stance
    • FY25 financial statements reflecting the derivative losses

BS