Indian Bank to pay dividend after a 12-yr gap

Net profit up 23.50% to Rs 504 cr, net NPA down to below 1%

Ten years back, Chennai-based Indian Bank created history by posting over Rs 1,600 crore net loss wiping out its entire net worth. This is the highest net loss recorded by any commercial bank in India.

Today, after a gap of 12 years, Indian Bank announced 13.58% dividend for its sole owner, the Government of India. In absolute terms, this amounts to Rs 101 crore, the highest dividend paid by this 100-year old bank. The last time the bank paid dividend was for FY93 - Rs 50 lakh.

It also cut down its net non-performing assets to below 1%, 0.97%, to be precise. At one point of time, Indian Bank was running over 30% NPAs in its books.

The bank reported a net profit of Rs 504.48 crore for FY06, recording a growth of 23.50% over Rs 408.49 crore in FY05. Since it is not a listed bank, it is exempt from announcing quarterly results. Operating profit of the bank was Rs 893.65 crore for FY06.

The capital of the bank stood at Rs 743.82 crore after netting off accumulated losses, as permitted by the government. Its capital-to-risk asset ratio (CRAR) is now 13.19%, K C Chakrabarty, chairman & managing director of Indian Bank, said.

Total income for FY06 rose to Rs 3,895.99 crore registering a growth of 13.27% over Rs 3,439.47 crore (FY05) and interest income increased 17.20% for the year.

Total deposits of the bank stood at Rs 40,805 crore as on March 31, 2006, up from Rs 34,808 crore, last fiscal, an increase of 17.23%. Advances, on the other hand, rose 22.33% to Rs 22,485 crore from Rs 18,380 crore. Return on average assets improved to 1.16% from 1.08%.

Indian Bank's retail advances grew 24% to reach Rs 5,850 crore constituting 26% of the bank's overall credit.

The bank effected NPA recovery of Rs 418.20 crore for the year against Rs 311.58 crore in FY05. Gross NPAs declined to Rs 669 crore from Rs 748 crore and the ratio of gross NPAs to gross advances declined to 2.91% from 3.96%. The net NPA declined from 1.35% to 0.79% from 1.35%.