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KOLKATA: State-owned has reported a net profit of Rs 1709 crore in the March quarter against a loss of Rs 2178 crore in the year ago period, buoyed by rise in core income and Rs 900 crore tax write back.
The net interest margin (NIM), a key profitability parameter, rose 12 basis points year-on-year to 2.85%.
“Ideally, we would like to grow our NIM to 3%,” chief executive Padmaja Chundur said, refraining from giving a future guidance on NIM due to uncertainties around the second wave of Covid-19 pandemic.
Operating profit of the bank rose by about 50% at Rs 2548 crore from Rs 1703 crore with interest income rising 62% at Rs 8904 crore from Rs 5493 crore over the same period, reflecting the benefit of the bank’s amalgamation with Allahabad Bank.
To that extent, these numbers are not strictly comparable since the current earnings are on a bigger balance sheet. The merger of Allahabad Bank into Indian Bank came into effect from April 1, 2020.
For example, the net loss was Rs 1641 crore for March 2020 quarter if the combined financials of Indian Bank and Allahabad Bank were considered. Similarly, the combined operating profit was Rs 2401 crore.
“The full benefit of the amalgamation will be kicking in when the expenses ratio will come down further,” Chunduru said. The bank’s expenses ratio improved by 149 bps to 47.59% in FY21.
Provisions to cover bad loans doubled to Rs 2870 crore for the quarter under review with higher stress likely on asset quality going forward. However, there was a dip in total provisions to Rs 1753 crore from 1892 crore (without taking the combined data), contributing to the rise in net profit.
The bank’s gross non-performing assets ratio rose to 9.85% at the end of March from 6.87% a year back. Combined gross NPA a year ago was 11.39%.
Its advances grew 6% to Rs 3.90 lakh crore. The growth is contributed by lending to retail, agriculture and MSME sectors. There was hardly any corporate loan demand since the corporate sector is deleveraging itself, Chunduru said.
The bank has its board approval for raising Rs 4,000 crore in equity but the management has not given any timeline for capital raising. The CEO said that there is no rush for it given the strong capital adequacy at 15.71% at the end of March.
The net interest margin (NIM), a key profitability parameter, rose 12 basis points year-on-year to 2.85%.
“Ideally, we would like to grow our NIM to 3%,” chief executive Padmaja Chundur said, refraining from giving a future guidance on NIM due to uncertainties around the second wave of Covid-19 pandemic.
Operating profit of the bank rose by about 50% at Rs 2548 crore from Rs 1703 crore with interest income rising 62% at Rs 8904 crore from Rs 5493 crore over the same period, reflecting the benefit of the bank’s amalgamation with Allahabad Bank.
To that extent, these numbers are not strictly comparable since the current earnings are on a bigger balance sheet. The merger of Allahabad Bank into Indian Bank came into effect from April 1, 2020.
For example, the net loss was Rs 1641 crore for March 2020 quarter if the combined financials of Indian Bank and Allahabad Bank were considered. Similarly, the combined operating profit was Rs 2401 crore.
“The full benefit of the amalgamation will be kicking in when the expenses ratio will come down further,” Chunduru said. The bank’s expenses ratio improved by 149 bps to 47.59% in FY21.
Provisions to cover bad loans doubled to Rs 2870 crore for the quarter under review with higher stress likely on asset quality going forward. However, there was a dip in total provisions to Rs 1753 crore from 1892 crore (without taking the combined data), contributing to the rise in net profit.
The bank’s gross non-performing assets ratio rose to 9.85% at the end of March from 6.87% a year back. Combined gross NPA a year ago was 11.39%.
Its advances grew 6% to Rs 3.90 lakh crore. The growth is contributed by lending to retail, agriculture and MSME sectors. There was hardly any corporate loan demand since the corporate sector is deleveraging itself, Chunduru said.
The bank has its board approval for raising Rs 4,000 crore in equity but the management has not given any timeline for capital raising. The CEO said that there is no rush for it given the strong capital adequacy at 15.71% at the end of March.
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