Public sector lender Indian Bank has reported a massive rise in its net profit for the December 2023 quarter helped by higher income growth and lower provisions amid challenges faced on the margin front.

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For the quarter ended December 2023, the bank’s net profit grew by 52 per cent to ₹2,119 crore compared with ₹1,396 crore in the year-ago quarter.

However, its operating profit stood at ₹4,097 crore against 4,061 crore, on the back of a single-digit rise in net interest income at 5,815 crore (₹5,499 crore).

While interest income rose 20 per cent at ₹14,198 crore (₹11,834 crore), non-interest income grew by 11 per cent at ₹1,902 crore (₹1,716 crore). Total expenses were higher by 26 per cent at ₹12,003 crore against ₹9,489 crore as the bank continues to be on a growth curve.

“As a result of wage settlement, we signed up for a 17 per cent hike, we provided for the same along with some amount for the consequent increase in pension during the quarter,” S L Jain, Managing Director & CEO of Indian Bank said.

Provisions (excluding taxes) were lower by 46 per cent at ₹1,350 crore (₹2,515 crore).

However, fresh slippages were higher at ₹1,429 crore compared with ₹1,192 crore in the year-ago quarter, but lower than ₹1,976 crore in the preceding quarter. Of the ₹1,429 crore slippages, the agriculture sector accounted for a higher amount at ₹592 crore (₹197 crore in Q3 of FY23), followed by MSME (₹411 crore), retail (₹293 crore) and corporate (₹133 crore).

Total recoveries (cash and upgradation) were at ₹2,509 crore (₹2,631 crore).

Asset quality

The bank’s asset quality continued to improve as its gross NPA dropped to 4.47 per cent in the December 2023 quarter from 6.53 per cent in the year-ago quarter and 4.97 per cent in the September 2023 quarter. Net NPA fell to 0.53 per cent from 1 per cent in the year-ago quarter and 0.6 per cent in the preceding quarter.

The bank’s domestic advances rose 12 per cent at ₹4,74,355 crore in Q3 of this fiscal (₹4,24,162 crore). Retail, agriculture, and MSME loans grew by 14 per cent at ₹99,251 crore, 16 per cent at ₹114,422 crore, and 7 per cent at Rs.83,172 crore. These three segments accounted for 62.58 per cent of the gross domestic loans. Corporate loans grew by 10 per cent at 1,77,510 crore.

Domestic deposits grew 8 per cent at ₹6,29,401 crore (₹5,83,998 crore). Domestic CASA share saw a marginal decline to 41.14 per cent from 41.18 per cent in Q2FY23.

The total business of the bank grew by 11 per cent y-o-y and stood at ₹11.64 lakh crore as of December 31, 2023.