Public sector lender Indian Bank has reported an almost 59% decline in standalone net profit for the fourth quarter ended March 31, 2018 at ₹131.98 crore from ₹319.70 crore in the year earlier period due to higher provisioning.
“Profit has come down in the fourth quarter after a circular [on stressed assets] issued by the RBI. In almost all banks, the accounts which were under pressure because of the withdrawal of reservation schemes, were required to be downgraded. So the provisioning part came there,” said Kishor Kharat, MD and CEO, Indian Bank.
The other reason was due to pressure in earnings from the bond market and absence of profit on sale of investments. “We could absorb all those provisions and still we could show profit. Despite the drop in net profit, we have declared 60% dividend, which was the same like that of last year,” he said.
During the period under review, the total income of the bank rose to ₹4,954.20 crore from ₹4,601.89 crore. Net interest income grew by 18.25%. Net interest margin (globally) grew by 2.84%. Our aim is to touch 3%, Mr. Kharat said.
NPA declines
Gross NPA ratio declined to 7.37% from 7.47% and net NPA to 3.81% from 4.39%. The bank made provisions and contingencies of ₹1,546.33 crore during the quarter from ₹806.91 crore in the year earlier period.
Provisioning for bad loans increased to ₹1,772.03 crore during the quarter from ₹608.42 crore the year earlier. On the stressed asset, he said the bank had identified 41 accounts with a total exposure of ₹5,481 crore. The first set of 18 bad accounts had a total exposure of ₹3,500 crore, for which provisioning for ₹1,833 crore was already made.
Talking about the five-year plan in which the bank aimed to double business, he said: “This is our first year. We had set a target of ₹3.6 lakh crore in total business for 2017-18, but closed at ₹3.71 lakh crore. We are very much on the path of achieving it.”
Capital adequacy ratio stood at 12.55%. Going forward, the plan is to focus more on lending to the non-corporate sector, instead of corporate sector. Currently, the lending ratio between non-corporate and corporate stands at 58% and 42% respectively. The bank wants to increase this to 60% this fiscal, he said.
