Public sector lender Indian Bank has posted a 139% increase in its standalone net profit for the second quarter ended September 2019 to ₹358.56 crore mainly on account of an increase in other income, said a top official.
“Our robust performance is attributed to focus on business growth and earnings, strict adherence to prudential lending norms coupled with our financial strength, including sustained efforts to keep NPAs under control,” said Padmaja Chunduru, MD and CEO, Indian Bank.
“We excelled in all the parameters apart from net interest margin (NIM) and current account savings account (CASA) deposits. Our focus on all these parameters is paying off. We are on the right trajectory,” she said.
During the quarter, total income grew 18% to ₹6,045 crore and net interest income rose 8% to ₹1,863 crore. Net revenue grew 20% to ₹2,601 crore. Other income (non-interest revenue) rose 72% to ₹738 crore, mainly on account of ₹249 crore profit on sale of investments.
Provisions rise
Provisions and contingencies rose to ₹1,143 crore against ₹1,041 crore mainly on account of higher provisioning towards income tax. Non-performing loan provision coverage ratio was 68.06%. Net interest margin (domestic) declined by 9 basis points and touched 2.92% and the bank aims to end the year at 3%.
On non-performing assets (NPAs), she said: “Our sustained focus on monitoring NPAs also enabled us to control fresh slippages,” she said. Gross NPAs increased by 4 basis points to 7.20% while net NPAs declined from 4.23% to 3.54%. Stressed advances, as a percentage of gross advances, increased to 8.53% (8.02%) while bad debt recovery improved by 31%.
Admitting that the bank’s gross NPAs were on the higher side, Ms. Chunduru said that it would be ideal to have it at about 2% and it might take a few more quarters for the bank to achieve the number.
Fresh slippages during the quarter stood at ₹741 crore, against ₹1,624 crore and cash recovery stood at ₹215 crore (₹231 crore).
On the proposed merger of Allahabad Bank with Indian Bank, she said it would result in doubling of overall bank size. Further, it would boost growth and the merged entity would emerge a leading bank in the industry.
Queried about the general insurance business of Allahabad Bank, she said a decision would be taken after completing due diligence.
Allahabad Bank is a joint venture partner in the Universal Sompo General Insurance Co. along with Indian Overseas Bank, Karnataka Bank, Dabur Investments and Sompo Japan Nipponkoa Insurance Inc.
Shares of Indian Bank gained 13.23% to close at ₹142.90 on the BSE on Wednesday.
