Indian Bank reports net loss of Rs 190 cr in Q4 due to IL&FS provisioning

Indian Bank plans to recover Rs 3,000 crore in FY20, to rope in strategic partner for NBFC arm

Indian Bank reported on Tuesday a net loss of Rs 190 crore during the quarter ended March 31, 2019, compared to a profit of Rs 131 crore in the same period last year. 

The loss was due to a provision of around Rs 220 crore towards IL&FS' account and another undisclosed corporate account. The bank said it is confident that it would return to profitability from the next quarter. Meanwhile, the bank is planning to raise Rs 1,500 crore of growth capital and plans to rope in a strategic partner for its NBFC arm, which recently got a deposit licence. 

"I am happy with the performance, considering that the circumstances are challenging", said Padmaja Chunduru, managing director and CEO, Indian Bank.

Indian Bank's provisions in the March quarter (Q4) of financial year (FY) 2019 at Rs 1,639 crore, up 6 per cent compared to Rs 1,546 crore in FY2018. Gross NPA in Q4 was 7.11 per cent, down from 7.46 per cent sequentially. Net NPA was at 3.75 per cent, down from 4.42 per cent quarter-on-quarter. The provision coverage ratio (PCR) increased by 145 basis points to 65.72 per cent. 

Speaking to Business Standard post results, Chunduru said she is confident of bringing the bank back into probitability, while increasing its business by around 15 per cent. 

“We want to have a healthy bottom line, while increasing the top-line,” she said. The bank’s global business, or total advances and deposits, stood at Rs 4.29 trillion at the end of Q4, up 16 per cent over the previous year. Retail and MSME loans accounted for more than 58 per cent of its book at the end of the March quarter, compared to 56.93 per cent at the end of the year ago period.

The bank plans to increase its interest income, other incomes etc, while focussing on recovery. In FY20, the lender plans to recover around Rs 2,500-3,000 crore, compared to Rs 1,850 crore in FY19. The modes of recovery include the NCLT, one time settlements, sale of non-crore assets etc.

Speaking about the bank's capital health, Chundru said Indian Bank is, perhaps, the only state lender that has sustained itself. She added that over the last two years, the government has given more than Rs 1 trillion to various banks as capital, but Indian Bank did not ask for a single rupee and it managed to sustain on its own.

The banks’ capital adequacy ratio was 13.21 per cent, compared to 12.55 per cent in March 2018. 

For capital growth, the bank may go to the market to raise Rs 1,500 crore. She said that the bank has raised Rs 308.67 crore through the Indian Bank Employees Share Purchase Scheme.

Chunduru said that Indian Bank may look to unlock value in its NBFC, which got a deposit licence by bringing in a strategic partner. The deal is expected to conclude by year end, she added.