The bank has recorded strong 32% increase in the net interest income with surge in domestic net interest margin to 3.06% in the quarter ended September 2020 from 2.3% in the previous quarter and 2.67% in the corresponding quarter of last year. The bank has also recorded a strong 29% growth in the non interest income to Rs 1611 crore boosting up the operating profit up by 40% to Rs 2995 crore.

On business front, the bank has recorded 5% growth in the overall business to Rs 8.6 lakh crore. The CASA deposit ratio of the bank has improved 99 bps yoy to 41% end September 2020. The bank has exhibited substantial improvement in the asset quality with net BPA ratio declining sharply to 2.96% end September 2020. The bank has also posted substantial increase in the provision coverage ratio to 84.39% end September 2020.

Business highlights:

Business volume of the bank has increased 5% to Rs 8678534 end September 2020, driven by 7% growth in deposits to Rs 501956 crore, while the advances rose 2% to Rs 365896 crore end September 2020.

The bank has posted 9% growth in Casa deposits, driven by 12% growth in current account deposits and 9% growth in saving account deposits. The bank has improved the Casa ratio to 41% end September 2020 from 40% end September 2019.

Within the loan book, retail advances have increased 2%, agriculture 7% and MSME 5%, while the corporate loan book has declined 2% end September 2020. The share of retail, agriculture and MSME loans as increased to 55% from 53% a quarter as well as a year ago.

 As per the rating distribution of the rated exposure of the bank, about 13% of the loan book of the bank is AAA rated, 27% is AA rated 20% is A rated, 20% is BBB rated and 20% is BB and below. Overall 80% of the rated exposure is above investment grade.

The investment book of the bank has increased 21% to Rs 180893 crore end September 2020. HTM book of the bank has increased from 10% to Rs 112310 crore, while AFS book has surged 27% to Rs 68494 crore. The modified duration of AFS and HFT Portfolio has declined to 2.87 years from years 3.62 year ago.

The bank has witnessed sharp decline in the cost of funds to 4.58% in Q2FY2021 from 4.89% in Q1FY2021 and 5.28% in Q2FY2020, while yield on advances have improved to 7.80% from 7.59% in the previous quarter. The net interest margin of the bank has improved to 3.06% in Q2FY2021 from 2.83% in Q1FY2021 and 2.67% in Q2FY2020.

Asset quality improves sharply

The fresh slippages of loans have declined to Rs 249 crore in the quarter ended September 2020. The cash recovery of NPAs was strong at Rs 795 crore, upgradations at Rs 195 crore, write-offs Rs 3092 crore.

The credit cost stood at 2.0% in Q2FY2022 compared with 1.93% in the previous quarter and 4.22% in the corresponding quarter of last year.

The bank has exposure of Rs 24416 crore to NCLT with the provisions of 98%.

The bank has network of 5993 domestic branches, 3 overseas branches, 5343 ATMs and business correspondence of 9057 BCs.

The outstanding MSME segment restructured loan stood at Rs 3693 crore.

The bank has improved capital adequacy ratio to 13.64% end September 2020 with CET 1 at 10.50%, additional Tier 1 at 0.17% and Tier II at 2.89%.

Net interest income surges on jump in net interest margin: The interest income of the bank has increased 7% to Rs 10057 crore, while the interest expenses have dipped 6% to Rs 5913 crore helping to net interest income jump by 32% to Rs 4144 crore.

Strong fee income and treasury income boosts non-interest income: The bank has posted strong 29% growth in the non-interest income to Rs 1611 crore in the quarter ended September 2020, driven by 39% jump in treasury income to Rs 631 crore, 38% surge in recoveries in bad debt Rs 141 crore, 29% growth in fee income to Rs 665 crore and 42% spurt in forex income to Rs 81 crore.

Cost to income ratio eases: The operating expenses of the bank have increased 22% to Rs 2761 crore, driven by 35% jump in the employee expenses to Rs 1750 crore. The cost-to-income ratio rose to 48% from 47% in the previous quarter, but declined from 51% in Q2FY2020.

The bank has created additional provisions of Rs 353 crore for wage revision in the quarter ended September 2020, while the cumulative provisions increased to Rs 1599 crore end September 2020.

Provisions declines: The loan loss provisions of the banks have declined 45% to Rs 1880 crore, while investment provisions have also dipped 63% to Rs 53 crore in the quarter ended June 2020. The standard advance provisions have jumped sharply to Rs 352 crore, while the bank has written back other provisions of Rs 1 crore in the quarter ended September 2020.

Book value of the bank stood at Rs 251.8 per share at end June 2020, while the adjusted book value (net of NNPA) was Rs 162.8 per share at end June 2020.

Financial Performance H1FY2021:

Bank has posted net profit at Rs 781.55 crore in the year half year ended September 2020 (H1FY2021). The net interest income came in at Rs 8018.33 crore, while non-interest income was Rs 2938.49 crore, pushing up net total income to Rs 10956.82 crore in H1FY2021. The operating expenses were Rs 5208.53 crore and provision and contingencies at Rs 4423.24 crore. The profit before tax came in at Rs 1325.06 crore in H1FY2021. The cost-to-income ratio was at to 47.5% in H1FY2021. An effective tax rate stood at 41.0% in H1FY2021.