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Indian Bank has reported 75% growth in net profit at Rs 365.37 crore for the quarter ended June 2019. The sharp increase in treasury income and decline in provisions boosted the earnings of the bank in Q1FY2020. On business front, the bank as has posted 14% growth in business with 12% increase in loan book.
However, the bank has posted 1% decline in net interest income (NII), as the domestic Net Interest Margin (NIM) of the bank declined to 2.85% in Q1FY2020. The core fee income of the bank also rose at slower pace of 1% in Q1FY2020.
The asset quality of the bank has deteriorated marginally in Q1FY2020. Bank has also witnessed decline in the credit to deposit ratio to 76.3% at end June 2019 from 78.2% at end June 2018. Further, the CASA ratio of the bank has eased to 34.2% at end June 2019 from 37.9% at end June 2018.
Asset Quality: The bank has witnessed marginal deterioration in asset quality in Q1FY2020.
- The fresh slippages of loans stood at Rs 1035 crore in Q1FY2020, while the recovery, upgradations and write-off together were higher at Rs 919 crore.
- The provision coverage ratio of the bank improved to 66.3% end June 2019 from 65.7% end March 2019 and 64.4% end June 2018.
- The risk weighted assets of the bank increased 3% to Rs 154370 crore end June 2019.
- The capital adequacy ratio of the bank was healthy 13.62% end June 2019.
| Asset Quality Indicators: Indian Bank |
|
Jun-19 |
Mar-19 |
Dec-18 |
Sep-18 |
Jun-18 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
13511.21 |
13353.45 |
13198.40 |
12333.61 |
11827.60 |
1 |
14 |
| Net NPA (Rs Crore) |
6824.24 |
6793.11 |
7571.07 |
7059.85 |
5998.62 |
0 |
14 |
| % Gross NPA |
7.33 |
7.11 |
7.46 |
7.16 |
7.20 |
22 |
13 |
| % Net NPA |
3.84 |
3.75 |
4.42 |
4.23 |
3.79 |
9 |
5 |
| % Provision Coverage Ratio |
66.34 |
65.72 |
60.91 |
60.82 |
64.38 |
62 |
196 |
| % CRAR - Basel III |
13.62 |
13.21 |
12.67 |
12.73 |
12.77 |
41 |
85 |
| Tier I - Basel III % |
11.72 |
11.29 |
11.24 |
11.53 |
11.55 |
43 |
17 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth eases marginally: The business of the bank has increased 14% to Rs 425793 crore end June 2019, driven by 12% increase in advances to Rs 184336 crore. Deposits increased 15% to Rs 241457 crore at end June 2019.
CASA deposits ratio declines: The CASA deposits of the bank rose 3% YoY to Rs 80076 crore at end June 2019. The CASA ratio declined to 34.2% at end June 2019 compared to 37.9% at end June 2018.
Loan growth eases: Advances growth was driven by retail loans rising 16% YoY to Rs 33774 crore at end June 2019, while credit to agriculture increased 25% to Rs 40022 crore and MSME 10% to Rs 32967 crore at end June 2019.
Investment book of the bank rose 2% YoY to Rs 68693 crore at end June 2019. The AFS book dipped 15% to Rs 21419 crore, while HTM book rose 12% to Rs 47159 crore at end June 2019. The duration of the overall investment portfolio stood at 2.79 years end June 2019 compared with 3.6 years at end June 2018.
Margins eases: The bank has showed 25 bps YoY jump in cost of deposits to 5.40%, while yield on advances declined 17 bps YoY to 8.40% in Q1FY2020. Thus, the domestic NIM of the bank has declined 29 bps YoY to 2.85%.
Branch expansion: The bank has network of 2875 branches and 3885 ATM's end June 2019.
Book value of the bank stood at Rs 343.4 per share at end June 2019, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 199.5 per share at end June 2019.
Quarterly Performance
NII declines as NIM eases: Bank has recorded 9% increase in the interest earned at Rs 5137.58 crore, while interest expenses declined 16% to Rs 3352.14 crore in Q1FY2020. NII declined 1% to Rs 1785.44 crore in the quarter ended June 2019.
Treasury income jumps: Bank has posted 1% growth in core fee income to Rs 281 crore, while the recoveries and other income jumped 34% to Rs 33 crore. Further, the treasury income spurted 1078% to Rs 202 crore, causing 58% jump in the overall non-interest income to Rs 694.54 crore in the quarter ended June 2019.
Expenses ratio rises: The operating expenses of the bank increased 16% to Rs 1105.77 crore, as other expenses moved up 10% to Rs 435.7 crore, while employee expenses increased 21% to Rs 670.07 crore in Q1FY2020. Cost to income ratio rose to 44.6% in Q1FY2020 compared with 42.2% in Q1FY2019, while the Operating Profit increased 6% to Rs 1374.21 crore.
Provisions and contingencies decline: The bank has showed 23% decline in provisions to Rs 794.82 crore. The NPA provision increased 6% to Rs 482.22 crore, while investment provisions dipped 55% to Rs 293.03 crore in Q1FY2020.
Effective tax rate increased to 36.9% in Q1FY2020 from 21.9% in Q1FY2019. Net Profit jumped 75% YoY to Rs 365.37 crore during quarter ended June 2019.
Annual Financial Performance:
Bank has posted 74% dip in net profit to Rs 321.95 crore in the year ended March 2019. The net interest income increased 12% to Rs 7018.09 crore, while non-interest income declined 22% to Rs 1882.89 crore, pushing up net total income by 3% to Rs 8900.98 crore in FY2019. The cost-to-income ratio increased to 45.2% in FY2019 compared to 42.3% in FY2018. The operating expenses increased 10% to Rs 4020.36 crore, while provision and contingencies galloped 17% to Rs 4596.40 crore, causing 74% dip in profit before tax to Rs 284.21 crore in FY2019. The bank has written back tax provisions of Rs 37.74 crore, net profit declined 74% to Rs 321.95 crore in FY2019.
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