Indian Bank Q2 results: Net profit jumps 2.6x

State-owned Indian Bank has reported a 2.6-fold rise in net profit for the September quarter buoyed by earnings from treasury operation and bad loan recovery while it logged lower interest income and higher provisions. The net profit for the quarter was at Rs 1089 crore as against Rs 412 crore in the year-ago period.

Its quarterly net interest margin (NIM) from domestic operation fell to 2.89 per cent from 3.06 per cent in the same period last year. Net interest income declined by 1 per cent at Rs 4084 crore as compared with Rs 4144 crore over the same period.

The bank’s managing director Shanti Lal Jain, who took charge on September 1, exuded confidence that interest income would rise with higher credit offtake which is expected going forward with the economic recovery.

Its operating profit rose 11 per cent at Rs 3276 crore as against Rs 2942 crore, riding on 26 per cent higher non-interest income at Rs 1966 crore as against Rs 1558 crore in the year-ago period. Non-interest income was buoyed by recovery of bad debts as well as higher forex income, Jain said.

The lender made a total recovery of Rs 3426 crore including upgradation of accounts as compared with Rs 1168 crore earlier. Provisions & contingencies for the second quarter ending September 30 were at Rs 2187 crore, 13.6 per cent lower compared with Rs 2530 crore earlier.

The bank’s gross non-performing assets ratio improved to 9.56 per cent at the end of the quarter from 9.89 per cent a year back. Net NPA however rose to 3.26 per cent as against 2.96 per cent over the same period.

It has seen fresh slippages of Rs 3952 crore with the classification of Srei Group’s account as NPA contributing Rs 1828 crore to it. "The slippage is due to one NBFC group account. We are not overly concerned over asset quality in the future," Jain said.

Its advances grew by 5 per cent to Rs 3.86 lakh crore, primarily driven by growth in retail, agriculture and MSME lending. Loans to these sectors constitute 60 per cent of the bank’s total advances.