With green shoots of recovery in business sentiments being seen across sectors, loan offtake is likely to go up in the coming quarters, said T.M. Bhasin, Chairman and Managing Director of Indian Bank.
Announcing the bank’s third quarter results here, he said the general economic slowdown cast its long shadow on the asset quality of banks. But, the banking industry is now confident that the worst is over, and “I believe that the economy will gather momentum in the next one or two quarters, leading to increased loan offtake and improved asset quality”.
Indian Bank, for the quarter ended December 31, 2014, has reported 5 per cent growth in net profit at ₹278 crore against ₹265 crore reported in the comparable previous year period. This was despite 26 per cent growth in operating profits of the bank. The lower growth in net profit was attributed to increased provisioning, particularly towards non-performing assets.
Domestic advances grew 9.38 per cent during the quarter. Total advances were at ₹1,14,732 crore, and gross non-performing assets were at 4.52 per cent. Slippages during the quarter was at ₹868 crore, of which ₹225 crore came from the sugar industry, followed by infrastructure (₹80 crore) and the hotel industry (₹35 crore).
During the quarter, the cost of deposits has come down to 7.10 per cent. This was attributed to ₹12,000-crore high-cost deposits shed by the bank in the last nine months. CASA (current account/savings account) deposits grew by 9.72 per cent during the third quarter taking its share to 30 per cent of the total deposits.
Net interest margin was at 2.47 per cent. Capital adequacy ratio as per Basel III improved to 13.06 per cent for the quarter. After ploughing back profits, it would improve to 13.8 per cent. “As this is sufficient for us, we have no plans to raise capital during the current financial year,” Bhasin said.
In the first nine months of the current financial year, the bank assigned NPA worth ₹384 crore to asset reconstruction companies for a consideation of ₹631 crore.