Indian Bank Q1 net profit drops 31% on high provision coverage

Bank's total income rose around 17% to Rs 4,195.47 crore from Rs 3,596.50 crore

Indian Bank has reported a net profit of Rs 317.39 crore during the first quarter ended June 30, 2013 as compared to Rs 461.74 crore, a year ago, a drop of around 31%. Bank's total income rose to Rs 4,195.47 crore from Rs 3,596.50 crore, an increase of around 17%.

T M Bhasin, chairman and managing director, Indian Bank said that profit dropped due to high provision coverage. The provision%age has increased to 62.10% from 60%.

The Bank has made a provision coverage of Rs 419 crore including Rs 203 crore towards pension, Rs 40 crore towards gratuity, Rs 42.5 crore for wage revision and others.

Bank's provisions (other than tax) and contingencies rose to RS 368.12 crore during the first quarter from Rs 145.70 crore, a year ago. The non performing loan provision coverage ratio stood at 61.25% as on June 30, 2013.

Bank's Gross NPA rose substantially to Rs 3,722.84 crore from Rs 1,553.87 crore, a year ago. As a%age it stood at 3.41% as compared to 1.66%. Net NPA stood at Rs 2,485.72 crore as compared to Rs 963.07 crore, in%age terms its 2.31% as compared to 1.04%.

Indian Bank's interest earning stood at Rs 3,665.80 crore during the first quarter as compared to Rs 3373.80 crore, a year ago.

On NPA he said, the Bank has made a NPA recovery of Rs 235 crore.

"We could contain Gross NPA at 3.33% as compared to 3.41% in December 2012 and net NPA was contained at 2.26 as compared to 2.31%," said Bhasin.

Global business of the Bank has increased to Rs 2,58,795 crore an increase of 17.2%.

Bank's CAR as per Basel II was 13.06% as on June 30, 2013 taking into account the ploughed back of profits in Q1, the CRAR improves to 13.39%. As per Basel III, it was at 12.58%.

The Bank has said it got headroom available in Tier II is Rs 84,22 crore. The Bank sufficiently capitalised, said Bhasin.

Indian Bank's restructured Book stood at Rs 10,020 crore as on June 2013. NPA's was at Rs 1,103 crore and Rs 345 crore provision was made against restructured advance.

According to Bhasin, power and discom accounted for almost 35.3%. The three State Electricity Boards (SEBs) contributes to Rs 3681 crore these includes Tamil Nadu Electricity Board, Rajasthan and Haryana

The other major restructuring was related to Aviation, which is Air India's account of Rs 650 crore.