Indian Bank posts 25% dip in Q1 net profit at Rs 369 crore

State-run Indian Bank on Friday reported 25 per cent dip in its standalone net profit to Rs 369 crore in the quarter ended June 2020 on higher provisioning for bad loans.

State-run Indian Bank on Friday reported 25 per cent dip in its standalone net profit to Rs 369 crore in the quarter ended June 2020 on higher provisioning for bad loans. The bank amalgamated Allahabad Bank with itself effective April 1, 2020. In the year-ago quarter, the amalgamated entity had reported a profit after tax of Rs 492 crore.         The pre-amalgamation standalone profit of the lender in June 2019 stood at Rs 365.37 crore.

The lender's managing director and CEO Padmaja Chunduru said it was a very satisfying quarter in terms of consolidating the performance of both the banks and all the key parameters such business growth, net interest income and asset quality have shown good improvement. "Despite all the additional provisions and the contingencies that we have created, net profit stood at Rs 369 crore,” she told reporters. Total provision grew 37 per cent to Rs 2,384 crore as against Rs 1,741 crore in the year-ago period for the combined entity. Loan loss provision was Rs 1,830 crore which included 100 per cent provision in respect of two accounts amounting to Rs 1,133 crore. These two accounts have been declared fraud. As on June 30, 2020, close to 23 per cent of the bank's book is under RBI moratorium.

Net interest income grew by 17 per cent to Rs 3,874 crore as against Rs 3,316 crore in the same period of FY20.   Net interest margin (NIM) (domestic) stood at 2.83 per cent against 2.87 per cent last year. Gross NPA improved to 10.90 per cent from 12.09 per cent while net NPA improved to 3.76 per cent from 4.68 per cent.

Provision coverage ratio (PCR) improved to 80.52 per cent as against 74.35 per cent. Fresh slippages during the quarter stood at Rs 523 crore. Upgradation and cash recovery was at Rs 240 crore.

The bank is expecting a total recovery of Rs 4,500 crore, including Rs 2,000 crore from NCLT accounts during the current fiscal. Capital adequacy ratio (CAR) as per Basel III guidelines was at 13.45 per cent as against regulatory requirement of 10.875 per cent. Tier 1 CAR was at 10.47 per cent. Domestic advances grew by 6 per cent to Rs 3,57,869 crore driven by growth in retail (11 per cent). Agriculture and MSME grew by 3 per cent. Chunduru said the bank has identified 21 real estate properties for monetisation in the first phase and expects to realise around Rs 450 crore. The bank is also looking to revamp the operation of its housing finance subsidiary -- IndBank Housing Ltd.

"We are looking at a partner who would bring in managerial competencies as well as capital partly," he said. The bank's scrip ended at 1.97 per cent down at Rs 62.20 apiece on the BSE on Friday. PTI HV MKJ MKJ