Secular growth helps Indian Bank post 62% rise in Q3 net

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Published: January 25, 2020 12:15:54 PM

indian bank, banking sectorTotal business of the bank crossed the Rs 4.50 lakh-crore mark with a growth rate of 12% over the year-ago period.

Chennai-headquartered public sector lender Indian Bank on Friday reported a 62% rise in its net profit to Rs 247 crore for the third quarter of the current fiscal, compared with Rs 152 crore in the corresponding quarter last fiscal. Total income increased 23% to Rs 6,506 crore as against Rs 5,269 crore.

Padmaja Chunduru, MD & CEO, said at a press conference that all the performance parameters improved and the quarter witnessed the secular growth, reporting good numbers despite one big account of DHFL turning NPA. “The performance was in line with our expectations. Other incomes, including fee income and profit on sale of investments, have helped the bank during the quarter.”

On the asset quality front, Chunduru said in Q3 there was fresh slippage to the tune of Rs 2,138 crore, with a big account of DHFL amounting to Rs 1,325 crore, turning NPA. Because of it, the bank’s provisioning towards bad assets substantially went up to Rs 1,700 crore, against Rs 974 crore in the year-ago period and Rs 721 crore in Q2 of FY20.

However, gross non performing assets as a percentage of gross advances came down to 7.21% during the quarter, from 7.48% in the corresponding quarter last year. Likewise, the net NPA declined to 3.50%, compared with 4.42% in the same quarter of previous year. The bank had a recovery of Rs 350 crore in the quarter and a technical write off to the tune of Rs 1,700 crore.

The earnings have been good despite recognition of a big account as NPA. The slippage otherwise was contained through close and vigorous follow up which lent stability to the asset quality metrics. Net NPA has come down sequentially from 3.54% to 3.50% and gross NPA at 7.2% was maintained at the same level,” Chunduru said.

Total business of the bank crossed the Rs 4.50 lakh-crore mark with a growth rate of 12% over the year-ago period. “It is set to double in size by June 2020,” she said.

Chunduru said that a 12% Y-o-Y increase in business was propelled by good growth, both in deposits and advances. The bank’s advances continued to ride on the retail growth momentum at 64%. Retail assets witnessed growth across all segments – retail at 22%, agriculture 13% and MSME 19%.

Chunduru anticipates the momentum in corporate sector growth would happen during the fourth quarter and they were signs of early green shoots.

On amalgamation with Allahabad Bank, she said the process is on and all activities are being done as per the expected timelines. “We are sanguine that this would be a seamless integration resulting in good synergy for the bank that will offer improved products and services for customers,” she said.

Domestic CASA deposits recorded a 10% growth and the share of CASA was 34.51% of total deposits as on December 2019. The bank had a capital adequacy ratio of 15%.

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