Shares of the state-run Indian Bank plunged after net profit missed analyst estimates and provisions against bad loans surged in the quarter ended March.
Net profit fell 58.7 percent year-on-year to Rs 132 crore during the previous quarter, the Chennai-based lender said in filings with the stock exchanges today. That compared to Rs 290 crore estimated by analysts tracked by Bloomberg. Net interest income, or the core income of the bank, grew 18 percent to Rs 1,637.7 crore.
Asset quality worsened as the gross non-performing assets rose to 7.37 percent of total assets, as against 6.27 percent in previous quarter. The ratio of net bad loans rose to 3.8 percent from 3.3 percent in the same period. Provisions against bad loans rose to Rs 1,772 crore from Rs 386 on a sequential basis.
The lender said it has made a provision of Rs 54 crore towards accounts that are currently undergoing insolvency proceedings at the National Company Law Tribunal. It has also provided for Rs 369 crore based on Reserve Bank of India’s revised guidelines on stressed assets.
Indian Bank disclosed a divergence of Rs 544 crore for the financial year ended March 2017.
After the earnings announcement, shares fell as much as 14 percent intraday – the most in five years.