Chennai-based public sector lender Indian Bank on Tuesday reported its fourth quarter results with its net profit growing three times to Rs 319.70 crore as against Rs 93.62 crore in the corresponding period last fiscal, riding on a 22% increase in net interest income. The bank has also announced a follow-on public offer (FPO) to bring down the government holding to below 75% from the current 82%, as required by the market regulator.
The bank plans to sell 4.75 crore equity shares as part of the FPO, and the money raised would be utilised to fuel the growth initiatives the bank is planning to undertake, after being in a “period of lull” for many quarters in the previous years, owing to asset quality issues.
The total income of the bank grew to Rs 4,601.88 crore during the quarter as compared to Rs 4,512.18 crore in the corresponding quarter of the previous fiscal. “We have have drawn up 5-year plan for creating a great bank with sound financial ratios,” Kishor Kharat, the new MD & CEO of Indian Bank, told reporters on Tuesday.
Elaborating on the FPO, he said that post the issue the bank’s capital adequacy ratio (CAR) would be around 16%. “ We have not yet thought about the quantum of funds we would be raising through this offer. We are basically doing FPO to comply with the Sebi rule which restricts promoters stake at 75% at any PSBs. We will be offering 4.5 crore shares and will be completing the issue during the current fiscal itself,” he said.
Apart from FPO, the bank is also contemplating issuing Basel -III compliant bonds to raise capital in the current fiscal. “Though we have not finalised anything on the amount, we could raise some thing between Rs 1,000 crore to Rs 5,000 crore,” he said. The board of directors of the bank recommended payment of dividend of Rs 6 per share for the year 2016-17.
He attributed the good performance of the bank to increase in net interest income (NII) which rose by 22%, increase in other income and effective fund management. NII grew by 22.06% to Rs 1,384.92 crore from Rs 1,134..65 crore. The major components of other income for the quarter were profit on sale of investments of Rs 135.18 crore and a commission & exchange income of Rs 257.36 crore.
Kharat said that the bank could contain the NPAs and only marginal increase in bad assets was reported during the fourth quarter. Gross NPAs were at 7.4% of gross advances as on March 31, 2017, as against 7.69% as on December 31, 2016 and 6.66% as on March 31, 2016. Similarly, net NPAs were at 4.39% of net advances as on March 31, 2017 as against 4.76% as on December 31, 2016 and 4.2% as on March 31, 2016.
He said , as per the growth plan, the bank has set a target to grow total business by 11.5% to 12% in 2017-18. The bank has also set a target to bring gross NPAs to less than 5% from 7.47% and net NPAs to less than 3% from 4.39%. NIM will be targeted to be increased to 3% from 2.6% in 2017-18, said Kharat. The bank’s CAR as per Basel III guidelines was at 13.64% as on March 31, 2017 as against a regulatory requirement of 10.25%, including capital conservation buffer of 1.25%.