IndusInd Bank shares jump 2% on RBI's nod for setting up a mutual fund subsidiary

IndusInd Bank shares rose 2% in early trade on Tuesday after it received approval from the Reserve Bank on August 19 for setting up a new wholly owned asset management subsidiary, marking its foray into the mutual fund business. Additionally, the central bank authorised the private sector bank to infuse equity capital into the new subsidiary.

Shares of IndusInd Bank surged as much as 2% to an intraday high of ₹1,371 on the NSE today. The private bank's stock has dropped over 15% this year, underperforming the benchmark Nifty 50, which has gained 12% in the same period.

In an exchange filing made after market hours yesterday, the bank confirmed that the approval comes with additional conditions outlined in the approval letter.

The new asset management company (AMC) will enable the bank to oversee mutual fund operations, supported by equity infusion from the bank. In the past, IndusInd Bank lacked significant scale in the mutual funds’ domain. The private bank’s promoter, IndusInd International Holdings Ltd (IIHL), a Mauritius-based investment firm, boosted its asset management footprint by acquiring a 60% stake in Invesco Asset Management India earlier this year. As of June 30, the IIHL held a 12.48% stake in IndusInd Bank, amounting to 8.95 crore shares.

In its Q1 2025 financial results, IndusInd Bank reported a consolidated net profit of ₹2,171 crore for the quarter ending June 30, 2024, reflecting a 2% increase from ₹2,124 crore in the same quarter last year. The bank's net interest income (NII) grew by 11% year-on-year to ₹5,408 crore, up from ₹4,867 crore in the previous year. The net interest margin (NIM) remained steady at 4.25% in Q1 FY25, compared to 4.29% in Q1 FY24 and 4.26% in Q4 FY24.

The bank's asset quality saw slight pressure, with gross non-performing assets (GNPA) rising to 2.02% from 1.94% in the year-ago period, and net NPA increasing to 0.60% from 0.58%. Deposits grew 15% year-on-year, reaching ₹3,98,513 crore in the first quarter of this fiscal, up from ₹3,47,047 crore in the same quarter last year.