The Hindu Business Line : Indian Bank makes `quality' net profit of Rs 242 cr in H1

INDIAN Bank made a net profit of Rs 242 crore for the first half of the current year — the first `quality' net profit in a decade, because it is more than the interest earned on recapitalisation bonds.

At a press conference here today, the bank's Chairman and Managing Director, Mr K.C. Chakrabarty, said: "we have a net profit even after servicing the entire capital."

Indian Bank was recapitalised to the extent of about Rs 4,500 crore, given in several tranches, in the form of interest-bearing bonds. Back-of-the-envelope calculations show that the bank earns interest anywhere between Rs 300 crore and Rs 400 crore.

"Until now the bank was recovering, now it is healthy," Mr Chakrabarty said.

Another reason for the qualitative improvement in the net profit is that it was made after making a higher prudential provisioning — at proposed regulatory stipulation of 0.40 per cent on standard assets as against 0.25 per cent now. Besides, it also provided additionally Rs 62 crore as "floating provision". Second, the higher net profit was achieved on a lower operating profit, which fell because of drying up of treasury income and increase in wage bill, thanks to the recent settlement with the unions.

Operating profit, however, was lower at Rs 420 crore, down from Rs 540 crore in the first half of last year.

In the first half of last year, the bank had earned a treasury income of Rs 116 crore against none in the period under review. Also, in the first half of the current year, the wage bill was higher by Rs 78 crore.

Indian Bank's net profit was substantially nourished by higher recoveries of NPAs. The bank recovered Rs 200 crore, more than twice the NPA fresh build-up of Rs 93 crore.

Mr Chakrabarty said he expected another Rs 200 crore -Rs 250 crore from recoveries in the second half.

Multi-city banking: The bank today launched `multi-city banking'. The multi-city cheques substitute demand drafts. The facility enables immediate credit to the beneficiary's account. This has been possible because the bank has brought 150 of its branches under `core banking solutions', under which transactions at all the networked branches are processed at a centralised server.

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