Indian Bank has reported a seven per cent increase in net profit to Rs 439 crore in the fourth quarter of 2010-11 compared with Rs 410 crore for the same period a year ago. The board of directors has recommended a dividend of 75 per cent (Rs 7.5 a share).

Addressing a press conference, Mr T.M. Bhasin, Chairman and Managing Director, Indian Bank, said the financial year of 2010-11 was a challenging year as the bank had to make provisions for gratuity and pensions of Rs 814 crore which would be amortised over a period of five years.

This means, a fifth of the sum will be treated as expenditure in the current year's profit and loss account. In addition, the bank will make a provision of Rs 148 crore for retired employees' pension.

Profits came from lending, rather than treasury, where the yield was negative. Mr Bhasin said that the bank's focus had been on growing profits rather than balance sheet size — it pared the costly short-term loans to Rs 3,000 crore from Rs 8,000 crore in the comparable quarter of last year.

Total bad loans declined to Rs 740 crore for the fourth quarter from Rs 988 crore for the first quarter in 2010-11. The bank had recovered about Rs 756 crore in 2010-11.

The bank expects to grow its loan book by 22 per cent for the current financial year.

Sri Lanka branches

Meanwhile, the bank plans to open three more branches in Sri Lanka at Trincomalee, Batticaloa and Hambantota, taking the number of branches in the country to five. Indian Bank had opened a branch in war-ravaged Jaffna, three months ago.