Public sector lender Indian Bank’s net profit during the second quarter of 2024-25 (Q2FY25) rose 36 per cent year-on-year (Y-o-Y) to Rs 2,707 crore, predominantly due to a sharp rise in non-interest income and a decline in provisions for stressed loans.
Sequentially, the Chennai-based lender’s net profit rose 13 per cent from Rs 2,403 crore in June 2024 (Q1FY25).
Its stock closed 10.6 per cent up at Rs 551 per share on the BSE on Friday.
Indian Bank’s net interest income (NII) expanded by eight per cent Y-o-Y to Rs 6,194 crore in Q2FY25, compared to Rs 5,740 crore in the same quarter a year ago. Its cost of deposits rose to 5.13 per cent in Q2FY25 from 4.89 per cent a year ago. The yield on advances improved slightly to 8.77 per cent from 8.75 per cent.
The net interest margin (NIM) declined by seven basis points (bps) to 3.39 per cent in Q2FY25 compared to 3.46 per cent in Q2FY24.
S L Jain, managing director and chief executive of Indian Bank, told Business Standard that the bank expects the NIM to be about 3.41 per cent in FY25.
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The bank’s non-interest income rose 27 per cent Y-o-Y to Rs 2,422 crore. Of this, recovery from bad loans rose by 45 per cent to Rs 732 crore in Q2FY25 from Rs 508 crore in Q2FY24, according to the analyst presentation.
The lender’s provisions for non-performing assets (NPAs) declined by seven per cent to Rs 837 crore in Q2FY25 from Rs 918 crore in Q2FY24.
The asset quality profile improved, with gross NPAs declining to 3.48 per cent in September 2024 from 4.97 per cent in September 2023.
Net NPAs declined from 0.60 per cent in September 2023 to 0.27 per cent in September 2024.
The provision coverage ratio (PCR), including written-off accounts, stood at 97.6 per cent in September, compared to 95.64 per cent a year ago.
Advances grew 12 per cent Y-o-Y to Rs 5.5 trillion in Q2FY25. Retail, agriculture, and MSME (RAM) advances increased by 14 per cent Y-o-Y to Rs 3.25 trillion in September 2024.
Deposits increased by 8 per cent Y-o-Y to Rs 6.93 trillion. The share of low-cost deposits — current account and savings account (Casa) — in the domestic business declined to 38.86 per cent in September 2024 from 40.11 per cent a year ago.
The bank aims to grow deposits by 8-10 per cent and maintain a Casa ratio of 40 per cent in FY25, Jain said.
The bank’s capital adequacy ratio stood at 16.55 per cent, with Tier-I at 14.01 per cent at the end of September 2024.