Indian Bank has posted a growth of 42.77 per cent in net profit for the quarter ended June 30, 2016, at Rs 307.36 crore as against Rs 215.27 crore net profit registered during the same quarter of previous fiscal year. Total income saw a marginal increase to Rs 4,512.96 crore during the quarter, as compared to Rs 3,394.53 crore during the corresponding quarter of previous year.
Announcing the financial results of the first quarter of the fiscal year, Mahesh Kumar Jain, managing director and CEO of Indian Bank said that the lender has been taking various initiatives to reduce the cost and improve the other income, which has reflected in the growth in profit.
The interest expense on deposits has come down, due to shifting the strategies, not only by shedding the high cost deposits, but also by shifting the mix of the deposits. The bank is focusing on CASA and retail deposits and less reliance on the higher deposits. At the beginning of current fiscal year, it announced its strategy to be positioned as a mid-sized bank with focus on retail and mid-corporate segment.
"During the remaining two quarters, there will be around Rs 50,000 crore of deposits which will get repriced, which was taken at previously at higher rate. In the times to come, we are expecting an improvement there," he said.
The bank has posted quarter after quarter improvement in the treasury profit and an improvement in the other income related to the credit related or non-credit related processing fee. Treasury income is mainly from sale of trading profit. This quarter, the bank has got around Rs 180 crore from trading profit. The bank has shifted the treasury to Mumbai during the quarter.
"Moving forward for sustaining the operating and the net profit, we are taking care to reduce the cost under each component and improving the income in every component. That is our strategy. We have to prevent the slippages and recover the existing NPAs," he said.
During the quarter ended June 30, 2016, gross NPAs stood at Rs 8,894.23 crore (6.97 per cent of the gross advances), as compared to Rs 5,815.14 crore (4.65 per cent) during the corresponding quarter of previous year. Net NPAs stood at Rs 5,552.04 crore (4.48 per cent) during the quarter, compared to Rs 3,193.29 crore (2.62 per cent).
The bank has seen fresh slippage of Rs 825 crore, of which around Rs 100 crore has been from the existing NPAs and around 60 per cent of the slippages of the remaining Rs 725 crore is because of the small ticket loans such as agriculture loans, MSME and personal loans.
"Only 40 per cent, around Rs 350 crore was from the large ticket advances. There is no high slippages comparing industry and economy trend," he said, adding that there cannot be a situation where NPAs come down, unless and until there is an improvement in the economy and the recovery.
In its NPA accounts, Iron and steel (which is around Rs 3,000 crore), Infrastructure (around Rs 1,300 crore), which includes Power sector of Rs 637 crore are the major sectors, he said. Textiles, all engineering and mining are the other top sectors in the NPA, he added.
The Bank, which has disbursed Rs 400 crore as education loan last year, is targeting a similar disbursement in the category during this year.