Indian Bank’s Second Quarter Profit Beats Estimate Despite Higher Provisions
Drop in gross bad loans lifts Indian Bank’s Q2 profit.
State-run Indian Bank posted a better-than-expected quarterly profit aided by a decline in bad loans even as provisions to cover such assets was raised.
Net profit rose 11.3 percent year-on-year to Rs 451.54 crore during the three-month period ending September, the Chennai-based lender said on Monday. That compared to Rs 397 crore estimated by analysts tracked by Bloomberg.
Net interest income, or the core income of the bank, grew 20.8 percent to Rs 1,544 crore. The lender improved its asset quality with the total non-performing assets (NPAs) coming down to 6.67 percent of the total advances, as against 7.21 percent in previous quarter.
Net bad loans too fell to 3.41 percent of the net advances from 4.05 percent in the previous quarter.
Bank’s provisioning for bad loans and contingencies was raised to Rs 744.55 crore for the quarter, up from Rs 478.27 crore for the same period a year earlier. Provisioning for bad loans alone stood at Rs 633.36 crore, up from Rs 616.44 crore last year.
The bank said that it was required to make an additional provision of Rs 357.26 crore to be spread over three quarters starting July-September 2017-18 against eight borrower accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC).
Accordingly, an additional provision of Rs 119.08 crore has been made during the quarter, leaving a balance provision of Rs 238.18 crore to be proportionately spread over remaining two quarters ie: December 2017 and March 2018.Indian Bank Management
Other Highlights:
- Other income increased 22.3 percent to Rs 7,153 crore.
- Operating Profit grew 36.7 percent to Rs 1,375 crore.
- Capital adequacy ratio stood at 13.16 percent.
- Provisions coverage ratio was 65.40 percent.
Shares of the bank jumped 9.30 percent to Rs 379.50 apiece on the BSE post earnings announcement.
(With inputs from PTI)