Indian Bank’s net profits rose by 21 per cent to Rs 372 crore in the first quarter ended June 2017, backed by robust growth in other income.
The Chennai-based public sector bank had posted net profits of Rs 307 crore in April-June 2016.
Its net interest income, interest income minus interest expenses, rose by 18 per cent to Rs 1,460 crore in the first quarter of FY18 from Rs 1,237 crore in the year-ago quarter.
Other income, comprising fees, commissions, and treasury revenues, rose by 48 per cent to Rs 652 crore in April-June 2017 from Rs 441 crore in the first quarter of FY17.
Kishor Kharat, managing director and chief executive officer, told Business Standard the bank was looking to raise equity capital of around Rs 1,200 crore by the end of the current calendar year.
It may issue around 47.5 million shares as part of the offer. Its capital adequacy ratio (CAR) stood at 13.58 per cent.
Gross NPAs rose to 7.21 per cent at the end of June 2017 from 6.97 per cent in June 2016.
The net NPA position improved to 4.05 per cent from 4.48 per cent a year ago. He said NPAs were in control. Gross NPAs dropped to 7.21 per cent from 7.47 per cent in the previous quarter. By the end of the year, the bank wants to bring it to 5 per cent.
Its provisions for NPAs more than doubled to Rs 681 crore in the first quarter of FY18 from Rs 327 crore in the year-ago quarter.
The provision coverage ratio (PCR), indicating the strength of the balance sheet to absorb stress, stood at 61.65 per cent at the end of June 2017.
Public sector lender Indian Bank's profit increased 21.2 percent year-on-year to Rs 372.4 crore in June quarter despite higher provisions. The growth was driven by net interest income, operating income and other income, with improvement in asset quality.
Net interest income, the difference between interest earned and interest expended, grew by 18.1 percent to Rs 1,460.5 crore compared with year-ago quarter.
Asset quality improved during the quarter as gross non-performing assets declined to 7.21 percent from 7.47 percent and net NPAs declined to 4.05 percent from 7.39 percent.
While addressing press conference, Kishor Kharat, Managing Director & Chief Executive Officer said slippages declined to Rs 604 crore in June quarter against Rs 668 crore in March quarter.
It has total of 11 accounts under 5/25, with exposure of Rs 1,350 crore; 14 accounts under SDR, with exposure of Rs 1,316 crore and 4 accounts under S4A, with exposure of Rs 230 crore in June quarter, he said.
He further said the bank identified portfolio of Rs 535 crore, which will be sold to asset reconstruction companies in Q2FY18.
"We are targeting return on assets of 1 percent in the short term and targeting to bring down gross NPA below 5 percent," he said.
Standard restructured book at the end of June quarter stood at Rs 6,294 crore. Indian Bank has exposure worth Rs 2,800 crore to 8 of 12 accounts identified by RBI under Insolvency and Bankruptcy Code.
Provision coverage ratio also improved to 61.7 percent from 58.1 percent on sequential basis.
Provisions for bad loans jumped 71.6 percent year-on-year to Rs 715.5 crore but declined 11.3 sequentially.
Other income (non-interest income) during the quarter shot up 47.6 percent to Rs 652.07 crore and operating profit increased 38.66 percent to Rs 1,252.4 crore compared with corresponding quarter of last fiscal.
At 12:57 hours IST, the stock price was quoting at Rs 336.00, up Rs 5.55, or 1.68 percent on the BSE.
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