Chennai: Indian Bank reported a steeper-than-expected drop in quarterly net profit as it set aside more money to cover potential losses from bad loans.

The dismal report card pushed shares down on Thursday.

The Chennai-based bank’s net profit fell to 42 crore from 277.5 crore a year ago. Analysts polled by Bloomberg had estimated a net profit of 259 crore.

Rising bad loans pushed provisioning costs up 94 % to 718 crore. Provisioning costs refer to the funds that banks have to set aside from their profits to meet any loss arising from bad loans.

Gross non-performing assets were up 29 % at 7,071 crore for the quarter ended December versus 5,461 crore in the year-ago period.

Net profit was impacted by higher provisioning due to slippages in steel and power sector in the third quarter, said Mahesh Kumar Jain, managing director and CEO of the bank.

“We can expect more pain in terms of larger delinquencies during next two quarters," he added.

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