In­dian Bank Q2 net falls 67% on higher pro­vi­sion­ing

Eyes a re­cov­ery of ₹850 crore from NCLT ac­counts with lender aim­ing to fo­cus on con­tain­ing slip­pages

The Hindu Business Line - - BANKING - BIJOY GHOSH

In­dian Bank re­ported weak per­for­mance in the Septem­ber quar­ter with a fall in prof­itabil­ity and wors­en­ing as­set qual­ity. This in­di­cates that the pub­lic sec­tor lender has hit a chal­leng­ing phase af­ter re­port­ing per­for­mance that was bet­ter than its peers till a cou­ple of quar­ters ago.

The Chen­nai-head­quar­tered bank’s net profit fell 67 per cent at ₹150 crore for the quar­ter ended Septem­ber 30, 2018, com­pared to ₹452 crore in the pre­vi­ous-year quar­ter.

Higher pro­vi­sion­ing for bad debts, mark-to-mar­ket losses, and sig­nif­i­cantly lower profit on sale of in­vest­ments were the key rea­sons for the drop in net profit, said Pad­maja Chun­duru, Man­ag­ing Di­rec­tor & CEO.

Net in­ter­est in­come of the bank grew 12 per cent to ₹1,731 crore (₹1,544 crore in Q2 of the pre­vi­ous fis­cal).

Op­er­at­ing profit

Other in­come was lower at ₹428 crore (₹714 crore). In the year­ago quar­ter, the bank had a profit on sale of in­vest­ment of ₹262 crore, which boosted other in­come. But in Q2 this year, it was just ₹5 crore.

Hence, its op­er­at­ing profit was lower at ₹1,191 crore (₹1,376 crore).

With higher slip­pages of ₹1,624 crore (against ₹310 crore in Q2 of the pre­vi­ous fis­cal and ₹1,038 crore in Q1 of this fis­cal) mainly due to in­fra­struc­ture ac­counts that were un­der the watch­list, its gross NPA in­creased to 7.16 per cent from 6.67 per cent in the year-ago quar­ter, but was down from 7.20 per cent this June quar­ter.

Net NPAs also in­creased to 4.23 per cent from 3.41 per cent Pad­maja Chun­duru, MD and CEO, In­dian Bank, an­nounces the bank’s re­sults in Chen­nai on Fri­day

in the year-ago quar­ter and 3.79 per cent in the pre­ced­ing quar­ter. To­tal pro­vi­sions were higher at ₹1,041 crore (₹924 crore). To­tal ad­vances grew 20

per cent at ₹172,322 (₹144,206 crore).

Of this, do­mes­tic ad­vances rose 20 per cent at ₹165,138 crore (₹1,27,750 crore), driven pri­mar­ily crore

by RAM (re­tail, agri­cul­ture and MSME), which posted a growth of 25 per cent at ₹96,902 crore, or 59 per cent of the gross ad­vances.

Mark-to-mar­ket losses and sig­nif­i­cantly lower profit on sale of in­vest­ments are the other rea­sons for the poor show

Chun­duru ex­pressed con­fi­dence that the bank would bounce back with bet­ter num­bers in the next two quar­ters, with sharper fo­cus on re­cov­er­ies and con­tain­ing slip­pages.

The bank ex­pects to re­cover about ₹850 crore over the next two quar­ters out of NCLT ac­counts that are in in­sol­vency mode.

Ex­po­sure to IL&FS Group

To a ques­tion, she said the bank’s ex­po­sure to the trou­bled IL&FS Group was ₹1,809 crore through 10 ac­counts, of which, two have turned NPA, with two more un­der the watch­list.

Re­fer­ring to the liq­uid­ity is­sues in non-bank­ing fi­nance com­pa­nies, she said the bank had no is­sues with NBFCs, and the qual­ity of that port­fo­lio re­mains healthy.

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