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Analyst Meet / AGM
10-Nov-18
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Conference Call
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Indian Bank
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Expect to reduce GNPA to 7% and NNPA to 3.5% by March 2019
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Indian Bank conducted a conference call on 09 November 2018 to discuss the financial results for the quarter ended September 2018. Padmaja Chundru, MD & CEO of the bank addressed the call:
Highlights:
- The net interest income of the bank has increased 12%, while bank has exhibited sharp improvement in NIM by 2.97% in Q1FY2019. The bank expects to maintain NIMs around 3% in FY2019.
- The loan growth of the bank has remained strong at 19% end September 2018, driven by robust 24% growth in the Retail, Agriculture, MSME (RAM) sector. The bank expects RAM sector loan growth to be above 20% and corporate sector loan growth at 13-14% in FY2019.
- The bank has well diversified loan book with RAM sector accounting for 60% of loan book.
- With the strong focus on capital conservation, the bank has substantially reduced the ratio of credit to risk weighted assets to 72.3% end September 2018 from 75.3% end June 2018.
- The capital adequacy ratio of the bank was healthy at 12.73%, while including profits for H1FY2019 it was higher at 12.97%. The bank has also raised Tier II bonds of Rs 400 crore in October 2018, which raised capital adequacy ratio to 13.24%.
- The bank has witnessed 13% declined in the operating profit mainly on account of dip in treasury income, while excluding treasury income, the operating profit has increased 6.5% in Q2FY2019.
- The provisions for investment depreciation were sharply higher in Q2FY2019, while pending for investment depreciation stands at Rs 356 crore to be provided over next two quarters.
- The CASA deposit ratio of the bank stood at 36.1% end September 2018, while the bank is strongly focused on improving CASA deposits ratio.
- The fresh slippages of loans jumped to Rs 2250 crore in Q2FY2019, of which Rs 557 crore related to non-fund based exposure. Further, 5 accounts had exposure of above Rs 100 crore relating to sector such as railway account with exposure of Rs 460 crore, road account Rs 300 crore, sugar account Rs 140 crore and power account Rs 130 crore.
- The bank expects slippages run rate at Rs 1000-1200 crore per quarter in Q3 and Q4FY2019. The bank expects to reduce GNPA ratio to 7% and NNPA to 3.5% by March 2019. The recoveries from NCLT exposure are expected to Rs 255 crore in Q3FY2019 and Rs 400-500 crore in Q4FY2019.
- The provision coverage ratio declined to 60.8% end September 2018, while the bank proposes to improve PCR by 2-3% in H2FY2019.
- The SMA-2 category loans of the bank stood at Rs 3700 crore end September 2018 compared with Rs 3070 crore end June 2018.
- The bank expects credit cost ratio to decline to 1.5-1.8% in H2FY2019.
- The bank has exposure of Rs 1800 crore to IL&FS group, most of which is to operating SPVs with cash flows. The bank has made provision of Rs 190 crore for two NPA accounts of the group with exposure of Rs 286 crore. The exposure to holding company stands at Rs 250 crore.
- About 60% of loan book has shifted to MCLR, while 20% is base rate linked.
- The bank expects to record RoA of 0.4-0.45% in FY2019.
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