Indian Bank conducted a conference call on 25 January 2023 to discuss its financial results for the quarter ended December 2022. Shanti Lal Jain, MD&CEO of the bank addressed the call:

Highlights:

The business of the bank as increased by 9% with 6% growth in the deposits and 13% growth in advance

Within deposit, the saving deposit increased by 5% and term deposits by 8%.

Within the loan book, the retail, agriculture and MSME (RAM) loan book has increased by 15%. Within retail, housing loans increased 12%, gold loan 23%, auto loans 27%, personal loans 35%.

Agriculture loans have increased by 15% and within agriculture crop loans have increased by 17%.

The share of RAM loan book in overall loan book stands at 61 to 62%.

The corporate loan book has expanded by 7%. Including the write-off of loans of Rs 5000 crore, the corporate book growth is higher at 13 to 14%.

The capital adequacy ratio would be 190 BPS higher including the profits for 9MFY2023.

The bank has raised the provision on restructured loan book to 15% as against the regulatory requirement of 10%.

The additional provision on restructured loan book is Rs 600 crore in Q3FY2023.

The collection efficiency of the restructured loan books stands at 90%.

The slippages of loans from restructured loan book amounted to Rs 418 crore in Q3FY2023.

The bank has created provisions of Rs 75 crore for wage revision. The bank has also front-loaded the provision of Rs 105 crore for profit linked incentive to employees.

The bank has been witnessing healthy collection efficiency of 95%.

The disbursements under ECLGS stands at Rs 11000 crore and the outstanding amount stands at Rs 7700 crore. The NPAs under ECLGS loans stands at Rs 430 crore.

The net interest margins in the previous quarter were impacted due to interest income reversals of Rs 450 crore, so there is a jump in the margin on a sequential basis.

The bank expects the benefit of repo rate and MCLR rate hike to accrue in the fourth quarter.

About 93% of the loan book is on floating rate. About 56% of the loan book is linked to MCLR.

The yield on personal loan is 10.5%.

Loan growth of the bank is expected to be in the range of 13-14%

Under profit linked incentive, the bank has to pay 15 days PLI for operating profit growth of more than 15%, 10 days PLI for operating profit growth of more than 10% and 5 days PLI for operating profit growth of more than 5%.

The bank expects a normal tax rate for next year.

The credit cost is expected to be substantially lower next year from 1.8% in the current year. The credit cost cannot be more than NNPA which stands at 1% end December 2022.