Indian Bank reports ₹514-cr profit in Q3

Public sector lender Indian Bank (post amalgamation with Allahabad bank) has reported a decent performance for the third quarter in a row. It recorded a net profit ₹514 crore for the quarter ended December 31, 2020, helped by lower provisions despite a 17 per cent drop in non-interest income. This is against a loss of ₹1,739 crore (combined results of both banks in Q3 of FY20).

In Q3, the operating profit of Indian Bank grew 10 per cent at ₹3,099 crore compared with ₹2,816 crore in the December quarter a yearago.

Total income stood at ₹11,421 crore (₹11,366 crore in Q3 previous fiscal). Net interest income was higher by 31 per cent at ₹4,313 crore (against ₹3,293 crore).

“Staff expenses were higher by 34 per cent at ₹1,572 crore. The bank has worked out the full impact of the XI bipartite settlement on wage revision settled in December 2020. As on December 31, 2020, the bank held provision of ₹1,570.57 crore to cover the full wage arrears payable against the provision of ₹1,598.97 crore held as on September 30, 2020.

“The bank has continued its steady growth in both business and profit combined with good control over asset quality. Our relentless focus on arresting slippages, coupled with better recoveries, contributed to good performance. Even taking into account unflagged NPAs the position is very much in control. While there is a steady growth in profits, our cost income ratio has been coming down every quarter,” said Padmaja Chunduru MD & CEO, Indian Bank.

Cost-to-income ratio stood at ₹45.73 per cent in Q3 (down from 47.97 per cent September 2020 quarter and 49.08 per cent in March 2020 quarter).

While total provisions were lower by 43 per cent at ₹2,585 crore (₹4,555 crore in Q3 of FY20), loan loss stood at ₹738 crore (₹4,705 crore).

Fresh slippages in Q3 were at ₹88 crore, while cash recovery was about ₹744 crore. Gross NPAs (GNPA) stood at 9.04 per cent in Q3 of this fiscal, down from 9.89 per cent in September 2020 quarter and 12.69 per cent from December 2019 quarter. Net NPA was at 2.35 per cent, down from 2.96 per cent in the preceding quarter, and 4.22 in the year-ago quarter. Provision coverage ratio was 86.51 per cent

“In case, if we factor the notional NPAs, the rations would be – 10.38 per cent gross NPA; 3.49 per cent net NPA; and 81.59 per cent PCR. We are confident of maintaining Gross NPA below 10 per cent and net NPA below 3 per cent,” said Chunduru.

Domestic advances grew 7 per cent to ₹3,79,074 crore. Retail, agriculture and MSME loans grew by 13 per cent (at ₹66,679 crore), 11 per cent (at ₹75,040 crore) and 11 per cent (at ₹68,805 crore), respectively. The three segments accounted for 56 per cent of advances.

Total deposits grew 8 per cent at ₹5,21,248 crore when compared with ₹4,81,277 crore in Q3 of last fiscal. CASA grew in double digit and had 41 per cent share.

The bank has secured board’s nod to raise up to ₹4,000 crore of equity to reduce government’s holding in the bank to below 75 per cent by August.