Indian Bank, which reported a 164% year-on-year jump in its standalone net profit to Rs 1,089.17 crore for the quarter ended September, has classified two accounts of Srei group worth Rs 1,800 crore, as non-performing assets (NPAs).

Fresh slippages in the fiscal second quarter, which was led by corporate and crop loans, fell to Rs 3,952 crore from Rs 4,204 crore in the preceding quarter.

The bank’s profit was driven by non-interest income, which grew 26% year-on-year to Rs 1,966 crore due to recovery of bad debts and forex income.

Indian Bank is looking to recover around Rs 8,800 in FY22, out of which Rs 4,800 crore has already been achieved in the first half of the fiscal. The bank has Rs 22,000 crore exposure in the National Company Law (NCLT). 

Net interest income (NII), the difference between interest earned and interest expended, fell 1% to Rs 4,083.49 crore in Q2 FY22 from Rs 4,144.04 crore a year ago.   

Operating profit stood at Rs 3,275.49 crore versus Rs 2,941.74 crore in the year-ago quarter. Operating profit margin improved to 28.63% from 25.33% while net profit margin increased almost threefold to 9.52% from 3.55%.

The asset quality improved with gross NPAs ratio falling to 9.56% from 9.89%. Percentage of net NPAs also fell to 3.26% from 2.96%.

Indian Bank has recognised eight bad loan accounts worth Rs 1,900 crore which are to be transferred to the National Asset Reconstruction Company (NARCL). The bank has made 50% provisions for those eight accounts.

Provisions and contingencies allocated to cover bad loans stood at Rs 2,187 crore in the September quarter versus Rs 2,530 crore in the year-ago quarter. 

Non-performing loan provision coverage ratio for September quarter was at 83.32% as against 82% a quarter ago.

“While there has been an improvement in the economic activity since the easing of lockdown measures, the slowdown may lead to a rise in the number of customer defaults and resultant increase in the provisions there against. Considering the regulatory actions, government intervention to support the economic recovery, the bank expects realisable value of the assets not to be significantly impacted," Indian Bank said.

Advances grew 5% to Rs 38,5730 crore in Q2 FY22  versus Rs 36,5896 crore a year ago. This was primarily led by growth in the retail, agri and MSME (RAM) segment, which saw a 13% year-on-year growth. While retail grew 14%, agriculture saw a 16% jump and MSME (micro, small and medium enterprises) loans rose 8%. The RAM segment contributes to 60% of the bank’s loan book.

Total deposits grew 10% year-on-year to Rs 5,51,472 crore in the September quarter from  Rs 5,01,956 crore a year ago.

CASA (current account savings account) deposits grew 8% year-on-year to Rs 2,25,309 crore in Q2FY22. Share of CASA to total deposits stood at 41% as on September 30, 2021. Current account deposits grew 14% and savings account deposits by 8%.