Indian Bank net drops 59% with more provision for stressed loans

Government owned-Indian Bank plans to raise around ~30 billion to support its growth during 2018-19.

It will look at Qualified Institutional Placement and rights issues to do so, Kishor Kharat, managing director, told this publication

The central government, he said, might not supply any, as it has to reduce stake to 70 per cent, from 82.87 per cent at present.

The March quarter profit dropped by 58.9 per cent to ~1.31 billion from the same period of 2016-17. Kharat said this was due to a rise in the provisioning coverage ratio to 65 per cent, from 59 per cent. The revised Reserve Bank of India (RBI) guidelines in this regard had a ~17-billion impact in the quarter.

Total income grew 7.6 per cent from a year before to ~49.5 billion. Gross non-performing assets (NPAs) dropped to 7.37 per cent of the total at ~119.9 billion, from 7.47 per cent at ~98.6 bn during the same quarter a year before. Net NPAs were 3.81 per cent at ~59.6 billion, as against 4.39 per cent at ~56.1 billion.

Kharat said of 18 major accounts referred for insolvency resolution to the National Company Law Tribunal (NCLT) on RBI order, the bank had exposure of ~35 billion. Against the required provisioning of ~18.33 billion, it had kept ~24.67 billion. Beside the RBI list, it had taken another 41 accounts to NCLT, of a combined ~54.8 billion. The bank is optimistic of recovering ~20 billion.

The target was ~3.6 trillion in total business for 2017-18 and the target was exceeded at ~3.71 trillion. Last year, the bank had announced a fiveyear plan, which envisaged a doubling of total business.

Kharat said the non-corporate contribution was 58 per cent and the corporate book had dropped to 42 per cent, from 49 per cent earlier. The targeting for this year is 60 per cent non-corporate.

The capital adequacy ratio is 12.55 per cent.