Indian Bank’s Q3 net profit fell by 50 per cent to ₹152 crore as on December 2018, against ₹303 crore recorded in the same period last year, mainly on account of higher provisioning towards bad loans.
“The main factor for decline in profit is due to additional non-performing assets (NPAs) added during this quarter due to our exposure to Infrastructure Leasing & Financial Services (IL&FS),” said Padmaja Chunduru, Managing Director, Indian Bank.
Of the total provision of ₹973 crore made during the quarter, provision on loans to IL&FS alone accounted for about ₹664 crore.
Chunduru said the bank is hopeful that the entire ₹664 crore classified as NPA will not become ‘non-performing’, as the government and Reserve Bank of India are working on a resolution process.
The asset quality of the bank further deteriorated with the increase in Gross NPA to 7.46 per cent (6.27 per cent) and net NPA rose to 4.42 per cent (3.30 per cent) on a year-on-year basis.
Fresh slippages for the quarter ended December 2018 stood at ₹1,769 crore against ₹903 crore a year earlier, while for the September quarter it was ₹1,624 crore.
Total income of the bank grew 7.47 per cent to ₹5,269 crore (₹4,903 crore) as on December 2018. Net interest income saw a growth of 5.8 per cent to ₹1,717 crore (₹1,623 crore) crore), while net interest margin improved to 2.88 per cent (2.85 per cent) in Q3 FY19.
“We will increase the number of current account and savings account (CASA) and realign fixed deposits (FDs) to bring down our cost of funding,” said Chunduru.
Indian Bank’s CASA grew 6.85 per cent to ₹78,890 crore (₹73,835 crore) for the December 2018 quarter, while global deposits stood at ₹2,25,847 crore(₹2,06,533 crore).
The banks’ global business crossed the ₹4 lakh crore milestone for the first time to reach ₹4,02,711 crore, registering a annual growth of 11.97 per cent.
“Our top priority now is to avoid fresh slippages and focus on recovery,” said Chunduru.