Indian Bank Q1 net profit jumps to ₹1,182 crore

Lender reaping synergy benefits: MD

Public sector lender Indian Bank reported standalone net profit for the first quarter of FY22 more than tripled to ₹1,182 crore, from ₹369 crore a year earlier.

“After successfully completing the amalgamation with Allahabad Bank during the previous year, the bank is now reaping the synergy benefits,” said Padmaja Chunduru, MD & CEO, Indian Bank. “With the vaccination programme picking up and the economy expected to open up in the coming quarter, the bank is well positioned to leverage the growth opportunities,” she added.

“I think this performance [net profit of ₹1,000 crore per quarter] can be sustained. The lending to corporate was muted in the first quarter due to COVID-19. We are expecting higher advances to corporates as we have backlog of ₹20,000 crore to be disbursed in the next two quarters,” Ms. Chunduru said.

During the quarter, total income remained largely flat at ₹11,500 crore, net interest income rose 3% to ₹3,995 crore, and non-interest income grew 41% to ₹1,877 crore. Net interest margin improved to 2.85% from 2.83% and the current year’s target is pegged at 3%. Provisions and contingencies declined to ₹2,290 crore from ₹2,384 crore and operating expenses contracted by 2% to ₹2,399 crore. Gross non-performing assets contracted to 9.69% from 10.9%, and net NPAs to 3.47% from 3.76%. The provision coverage ratio improved to 82% (80.52%).

Total business recorded a year-on-year growth of 9% at ₹9,29,708 crore with deposits accounting for ₹5,40,082 crore.

During the quarter, the bank reported that fraud was committed in 12 borrowal accounts, amounting to ₹388 crore. In respect of loans and advances classified as fraud, the bank holds 100% provision. The bank is holding total provision of ₹6,933 crore for the accounts covered under the provisions of the Insolvency and Bankruptcy Code.

Ms. Chunduru said that they had applied for 9.9% stake in the proposed bad bank and had transferred eight accounts for resolution.

Asserting that customers migrating to digital channels were on the rise, she said currently this stood at 42% and the aim was to increase to 60% in 18 months.

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