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Indian Bank has reported 139% growth in net profit at Rs 358.56 crore for the quarter ended September 2019. The bank has posted improved 8% growth in net interest income (NII), driven by sequential improvement in domestic Net Interest Margin (NIM) to 2.92% in Q2FY2020 compared to 2.85% in Q1FY2020. The bank has posted sharp 72% surge in the non-interest income with spurt in treasury income, while the core fee income of the bank improved 4% in Q2FY2020.
On business front, the bank as has posted 14% growth in business with 13% increase in loan book. The asset quality of the bank has improved in Q2FY2020. The CASA ratio of the bank has improved on sequential basis to 34.7% at end September 2019 from 34.2% at end June 2019.
Asset quality improves: The bank has improved asset quality in Q2FY2020 with the decline in fresh slippages of loans.
- The fresh slippages of loans stood at Rs 741 crore in Q2FY2020, while the recovery, upgradations and write-off together were higher at Rs 314 crore.
- GNPA ratio has declined to 7.2% and NNPA ratio dipped to 3.54% end September 2019.
- The provision coverage ratio has further increased to 68.06% end September 2019.
| Asset Quality Indicators: Indian Bank |
|
Sep-19 |
Jun-19 |
Mar-19 |
Dec-18 |
Sep-18 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
13980.74 |
13511.21 |
13353.45 |
13198.40 |
12333.61 |
3 |
5 |
13 |
| Net NPA (Rs Crore) |
6613.47 |
6824.24 |
6793.11 |
7571.07 |
7059.85 |
-3 |
-3 |
-6 |
| % Gross NPA |
7.20 |
7.33 |
7.11 |
7.46 |
7.16 |
-13 |
9 |
4 |
| % Net NPA |
3.54 |
3.84 |
3.75 |
4.42 |
4.23 |
-30 |
-21 |
-69 |
| % Provision Coverage Ratio |
68.06 |
66.34 |
65.72 |
60.91 |
60.82 |
172 |
234 |
724 |
| % CRAR - Basel III |
14.52 |
13.62 |
13.21 |
12.67 |
12.73 |
90 |
131 |
179 |
| Tier I - Basel III % |
12.69 |
11.72 |
11.29 |
11.24 |
11.53 |
97 |
140 |
116 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Healthy business growth: The business of the bank has increased 14% YoY to Rs 447420 crore end September 2019, driven by 13% increase in advances to Rs 194248 crore. Deposits moved up 15% to Rs 253172 crore at end September 2019.
CASA deposits ratio improves on sequential basis: The CASA deposits of the bank moved up 10% YoY to Rs 85108 crore at end September 2019. The CASA ratio moved up on sequential basis to 34.7% at end September 2019 from 34.2% end June 2019, but declined from 36.1% at end September 2018.
Strong domestic loan growth: Advances growth was driven by retail loans rising 17% YoY to Rs 35920 crore at end September 2019, while credit to agriculture increased 16% to Rs 40980 crore and and MSME 19% to Rs 36765 crore at end September 2019.
Investment book of the bank moved up 13% YoY to Rs 76648 crore at end September 2019. The AFS book rose 5% to Rs 27084 crore, while HTM book increased 17% to Rs 49206 crore at end September 2019.
The duration of the overall investment portfolio stood at 3.28 years end September 2019 compared with 3.26 years at end September 2018.
Margins improve on sequential basis: The bank has showed 21 bps YoY increase in cost of deposits to 5.45%, while yield on advances moved up 24 bps YoY to 8.64% in Q2FY2020. The domestic NIM has improved 7 bps qoq to 2.92%, while eased from 3.01% in Q2FY2019 .
Branch expansion: The bank has added 9 branches and 72 ATMs in Q2FY2020, taking overall tally to 2884 branches and 3957 ATM's end September 2019.
Book value of the bank stood at Rs 350.7 per share at end September 2019, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 216.2 per share at end September 2019.
Quarterly Performance
NII rises as NIM improves: Bank has recorded 13% increase in the interest earned at Rs 5307.67 crore, while interest expenses declined 16% to Rs 3444.63 crore in Q2FY2020. NII improved 8% to Rs 1863.04 crore in the quarter ended September 2019.
Treasury income spurts: Bank has posted strong 4% growth in core fee income to Rs 304 crore, while the recoveries and other income jumped 31% to Rs 38 crore. Further, the treasury income zoomed to Rs 249 crore from mere Rs 4.97 crore in Q2FY2019, boosting up overall non-interest income by 72% to Rs 737.65 crore in the quarter ended September 2019.
Expenses ratio improves: The operating expenses of the bank increased 13% to Rs 1098.91 crore, as other expenses moved up 18% to Rs 513.14 crore, while employee expenses moved up 10% to Rs 585.77 crore in Q2FY2020.
Cost to income ratio declined to 42.3% in Q2FY2020 compared with 44.8% in Q2FY2019, helping the Operating Profit to increase 26% to Rs 1501.78 crore.
Provisions and contingencies decline: The bank has showed 9% decline in provisions to Rs 909.37 crore. NPA provisions declined 4% to Rs 720.9 crore, while investment provisions dipped 53% to Rs 154.68 crore in Q2FY2020.
The decline in provisions boosted up PBT by 217% to Rs 592.4 crore in Q2FY2020.
Effective tax rate jumped to 39.5% in Q2FY2020 from 19.6% in Q2FY2019. Net Profit surged by 139% YoY to Rs 358.56 crore during quarter ended September 2019.
Financial Performance H1FY2020
Bank has posted 101% increase in net profit to Rs 723.93 crore in the year half year ended September 2019 (H1FY2020). The net interest income increased 3% to Rs 3648.47 crore, while non-interest income moved up 65% to Rs 1432.19 crore, pushing up net total income by 15% to Rs 5080.66 crore in H1FY2020. The operating expenses increased 15% to Rs 2204.69 crore, while provision and contingencies dipped 16% to Rs 1704.19 crore, allowing profit before tax to increase 158% to Rs 1171.79 crore in H1FY2020. The cost-to-income ratio improved to 43.4% in H1FY2020 compared to 43.5% in H1FY2019. An effective tax rate increased to 38.2% in H1FY2020 compared to 20.9% in H1FY2019. The net profit has increased 101% to Rs 723.93 crore in H1FY2020.
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