Shares of Indian Bank Ltd jumped 10% on Tuesday after the state-run bank reported a 42.77% increase in its June quarter net profit, beating analysts’ estimates.
The bank attributed the net profit of Rs.307.36 crore, up from Rs.215.28 crore a year ago, to higher net interest income, other income and lower employee cost.
A Bloomberg poll of seven analysts had estimated a net profit of Rs.148.70 crore.Net interest income (NII), or the core income a bank earns by giving loan Rs.1,236.32 crore in the June quarter from Rs.1,120.33 crore last year. Other income increased 17.6% to Rs.441.67 crore from Rs.375.57 crore in the same period last year. Employee cost fell 8.4% to Rs.485.59 crore.
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Gross non-performing assets (NPAs) rose 0.76% to Rs.8,894.24 crore at the end of the June quarter from Rs.8,827.04 crore in the March quarter. On year-on-year basis, gross NPAs jumped 53% from Rs.5,815.15 crore. As a percentage of total loans, gross NPAs stood at 6.97% at the end of the June quarter, compared to 6.66% in the previous quarter and 4.65% in the year-ago quarter.
Net NPAs were at 4.48% in the June quarter compared to 4.2% in the previous quarter and 2.62% in the same quarter a year ago.
Despite the deterioration in asset quality, the bank didn’t make higher provisions. Provisions and contingencies fell 48.75% to Rs.416.99 crore in the quarter from Rs.813.58 crore in the March quarter. On year-on-year basis, provisions rose 2.2% from Rs.408.07 crore.
As a result, its provision coverage ratio dropped to 53.89% as of 30 June from 60.90% a year ago.
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