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Even as public sector lender Indian Bank reported a significant increase in its net profit for the quarter ended June 30, 2021, worries returned about the quality of its assets. Fresh slippages soared to ₹4,204 crore in the first quarter as against ₹523 crore in the corresponding previous period.
Total provisions stood at ₹2,290 crore during the lockdown-hit June 2021 quarter compared to ₹2,384 crore in the year-ago quarter and ₹839 crore in the March 2021 quarter.
“Sequential increase in provisions was on account of a spike in bad loans during this quarter due to lockdown-related impact,” said Padmaja Chunduru, MD & CEO. The MSME segment accounted for ₹2,472 crore of the total slippages.
Gross NPAs stood at 9.60 per cent of total advances, down from 10.9 per cent in the year-ago quarter and 9.85 per cent in the preceding quarter. However, net NPAs inched up marginally on a sequential basis to 3.47 per cent from 3.37 per cent but were lower than 3.76 per cent in Q1 of last fiscal.
Lockdown impact
Chunduru said though the June quarter saw a spike in NPAs, caused by the lockdown and associated challenges, the bank is confident of maintaining growth in bottomline as it had identified growth areas for a sustained performance.
Profit surges y-o-y
For the first quarter of this fiscal, the bank’s net profit stood at ₹1,182 crore compared to ₹369 crore in the June 2020 quarter, when it announced the first results of a merged (with Allahabad Bank) entity. But this June quarter profit was down 31 per cent compared with the ₹1,709 crore in the March 2021 quarter.
The net interest income grew marginally to ₹3,994 crore in Q1 (₹3,874 crore), while the non-interest income jumped 41 per cent to ₹1,877 crore (₹1,327 crore) helped by rise in forex income and higher recovery.
“Post amalgamation, the synergy benefits are coming in terms of cost efficiencies as cost to income ratio was at 40.80 per cent in Q1 of this fiscal as compared to 47.06 per cent in Q1 of last fiscal,” said Chunduru.
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