Public sector lender Indian Bank has posted a drop of 37.1% in net profit for the quarter ended December 31, 2012, at Rs 330.58 crore compared to Rs 525.92 crore net profit during the same period of last fiscal, mainly owing to the higher provisioning towards various requirements.
The total income of the Bank stood at Rs 3,786.63 crore for the three months ended December 31, 2012, as against Rs 3,505.92 crore registered during the corresponding period of last year, an increase of 8%.
The Bank's non performing assets has shown an increase during the quarter as compared to the same period last year.
T M Bhasin, chairman and managing director of Indian Bank, told reporters that the Bank had to make an additional provisioning of around Rs 150 crore in the third quarter. The Bank had to make a provision of Rs 40 crore towards pension corpus for second time option offered for employees opted for VRS (voluntary retirement scheme).
"There was also an adhoc provision of Rs 15 crore towards expected wage revision. In addition, Rs 96 crore has been provided towards restructured assets," he added.
Besides, there were two items of exceptional income in the quarter ended December 2011, which increased the profit during that fiscal if it is compared with the quarter ended December 2012. There was a reversal of provision on deferred tax liability, which was around Rs 52 crore and a one time income of Rs 51 crore from foreign exchange during the quarter ended December, 2011, he said.
The gross NPA has shown an increase to Rs 3,180.1 crore during the quarter ended December 31, 2012, compared to 1,190.4 crore during the same period of previous fiscal year. The percentage of gross NPA stood at 3.18 per cent during the last quarter compared to 1.35 per cent on the corresponding period of previous fiscal.
There were slippages in some accounts in real estate and boiler construction sectors during the nine months ended December 2012, compared to the corresponding period of previous fiscal.
The net NPA has increased from Rs 695.31 crore (0.80%) in quarter ended December 31, 2011, to Rs 2141.86 crore (2.17%) during the third quarter of the current fiscal. The increase in NPA is because of some technical reasons and the Bank is expecting the NPA levels to come down in near future, said Bhasin.
To cut base rate
The State-run commercial lender is also planning to cut base rates by 30 basis points, from February 9, 2013. The base rates would be reduced from 10.5 per cent to 10.2 per cent, with this.
The Bank would also get around Rs 330 crore from the recent policy relaxation by Reserve Bank of India (RBI). It may be noted that the RBI in the end of January, has announced cut on Cash Reserve Ratio by 25 basis point to 4 per cent. This is expected to see an infusion of Rs 18,000 crore into the banking system, of which a share would come to the Indian Bank.
