Indian Bank posts Q4 profit of Rs 1,709 cr versus Rs 1,641 cr year-ago loss

May visit market to raise equity capital

Public sector lender Indian Bank has posted a net profit of Rs 1,709 crore in the fourth quarter ended March 2021 (Q4FY21) as against net loss of Rs 1,641 crore in the same quarter last year (Q4FY20).

The net profit for FY21 stood at Rs 3,005 crore as against loss of Rs 4,643 crore for FY20. This was the first year of operation for the amalgamated entity after Allahabad Bank merged with Indian Bank on April 1, 2020.

Its board has recommended a dividend of Rs two per equity share (20 per cent) for the financial year 2020-21. Its stock closed 1.13 per cent up at 142.6 per share on BSE.

Its net interest income rose marginally in Q4FY21 to Rs 3,334 crore from Rs 3,310 crore in Q4FY20. Net Interest Margin (NIM) for domestic operations decreased by 33 basis points (bps) to 2.34 per cent for Q4FY21 as against 2.67 per cent for Q4FY20.

Padmaja Chunduru, managing director and chief executive, said the interest income reversal for bad loans impacted the NIM in Q4FY21. For FY21, net interest margin rose by 12 bps to 2.85 per cent and expects to improve to about 3 per cent for the current fiscal FY22. The focus is on reducing cost of funds and enhancing loans which will earn better yield without impact asset quality.

Non-interest income for Q4FY21 was flat at Rs 1,744 crore in Q4FY20.

Its provisions & contingencies in Q4FY21 stood at Rs 839 crore as against Rs 4,042 crore for Q4FY20. The provision coverage ratio (PCR) inched up marginally to 68.09 per cent in March 2021 from 66.02 per cent a year ago.

The asset quality profile improved with gross Non-performing assets down to 9.85 per cent in March 2021 from 11.39 per cent in March 2020. The net NPA also dipped to 3.37 per cent in March 2021 from 4.19 per cent in March 2020.

Advances grew by six per cent to Rs 3,90,317 crore in March 2021 over Rs 3,68,664 crore a year ago. Bank has guided for 10 per cent growth in credit for FY22. It will increase corporate lending where the approved pipeline is about Rs 30,000-40,000 crore.

The bank’s total Capital Adequacy Ratio (CRAR) stood at 15.71 per cent in March 2021, up from 13.27 per cent in March 2020. Chunduru said while its capital profile is robust, the bank will likely raise equity capital for growth. It will prefer to be ready to benefit from business opportunities later in the year. The approval for raising up to Rs 4,000 crore in capital are already in place.