Indian Bank Q1 net profit increases 21% to Rs372 crores
Mumbai: Indian Bank Ltd on Friday reported a 21.16% increase in June-quarter net profit on the back of higher net interest income. The bank reported a net profit of Rs372.4 crore compared with Rs307.35 crore a year ago.
Net interest income (NII), the core income a bank earns from its lending business, rose 1.87% to Rs1,259.48 crore. Non-interest income—which includes fees and commissions, and treasury income—jumped 47.63% to Rs652.07 crore.
NII growth was fuelled by a growth in loans, particularly in the non-corporate book as well as an improvement in net interest margins (NIM) which rose to 2.79% from 2.52% a year ago.
“In the past few quarters, business growth was controlled for the sake of consolidation and qualitative improvement,” said Kishor Kharat, managing director and chief executive officer.
While Indian Bank’s overall loan book grew 4.99% from a year ago, credit to retail, agriculture and small firm grew by 14%. Retail lending constitutes 51.25% of advances now as compared to 49.25% in the June 2016 quarter.
The asset quality picture was mixed. The stock of bad loans fell on a sequential basis but it rose as compared to the previous year.
As the end of June, Indian Bank’s gross non-performing assets (NPAs) stood at Rs9,653.01 crore, down 2.2% from the March quarter. However, it was 8.53% higher from a year ago.
As a percentage of total loans, gross NPAs stood at 7.21%, compared to 7.47% reported in the previous quarter.
The lender’s provisions, the money kept aside to cover for loans, rose 71.6% from a year ago to Rs715.55 crore in the June quarter.
Kharat said that Indian Bank has total exposure of Rs2,800 crore to 8 of the 12 accounts identified by the RBI for insolvency proceedings.
The bank had decided to sell bad loan portfolio of Rs535 crore to asset reconstruction companies in the July to September quarter, he added.
Indian Bank closed at Rs328.85 on the BSE, down 0.48% from Thursday’s close. India’s benchmark Sensex index rose 0.39% to 32,028.89 points.