INDIAN BANK = 1ST QTR =Q1 FY 2011 = GOOD PERFORMANCE ON ALL PARAMETERS EXCEPT NPAS = FUTURE PROMISING

INDIAN BANK

Q1 FY 2011

HIGHLIGHTS

·        Growth in Operating Profit  : 32.88%(YoY); up from  Rs.630 cr to Rs.838cr

• Business grew  by 23.56% YoY (18.62% in Deposits and 30.86% in Advances)

• Growth in CASA deposits : 29.60%;

·        CASA share to Total Deposits higher at 33.34%(30.39%)

•Domestic Business crossed`1,50,000crore

•Growth in Net interest income : 25.62%(YoY)

•Net Interest Margin improved to 3.71% from3.56%(YoY)

•Growth in core non-interest income :54.37%(YoY)

•Healthy Capital Adequacy at : 12.50%

•EPS higher at  : 33.16(`29.76)

•Book  value higher at Rs.163.23pershare(20.71%)

•Net worth grew by 19.37% to Rs.7415.17Crore

•RoA in Q1 is :1.42%

•Return on Average Net Worth is : 20.36%

Unaudited (Reviewed) Financial Results

 for the Q/E 30th June, 2010

As can be seen from the results in figures below and the percentages of q/e June 2010 figures with those of the previous quarter (Q4 FY2010) , with the corresponding Quarter (Q1 FY2010) and proportionately (Q1 * 4) with the previous full year of FY2010 – the bank has performed reasonably well  in respect of most of the parameters – except NPAs.

Interest on Advances      at Rs.1584.58 Cr has grown by 5.5%  from previous quarter and by 11.6% from corresponding quarter and proportionately by 9.3% from FY2010.

Income on Investments at Rs.526.23 cr is up by 2.9% from previous Qtr, - up by 18.2% from corresponding Qtr – and proportionately up by 5.4% from FY2010.

Interest Earned        is at Rs.2121.79 cr – up by 4.8% on previous Qtr -  up by 12.8% on corresponding Qtr – and proportionately up by 8% on FY2010.

Total Income is Rs.2477.24 Cr – up by 6.9% from previous Qtr – up by 11.1% from corresponding Qtr – and up by 9.7% from FY2010.

Interest Expended is Rs.1195 Cr – up by 9.6% from previous Qtr – up by 4.6% from corresponding Qtr – and up proportionately by 5% from FY2010.

Total Expenditure is Rs.1639.42 Cr  - up by 13.4% from previous Qtr – up by 2.5% from corresponding Qtr – and proportionately UP by 4.4% from FY2010.

Operating Profit  is Rs.837.82 Cr – down by 4% from previous Qtr – but up by 32.9% from corresponding Qtr – and proportionately up by 22% from FY2010.

Net Profit         is Rs.368.15 Cr – which is down by 10% from previous Qtr – but up by 11% from corresponding Qtr – but down by 5.3% proportionately from FY2010.

Basic EPS  is Rs.8.29 – down by 11% from previous Qtr (Rs.9.27) – but up by 11.4% from corresponding Qtr (Rs.7.44) – but down proportionately by 5.5% from FY2010 (Rs.35.09).

Capital Adequacy Ratio is 12.16 which is quite healthy.

Return on Assets at 1.42 is quite Healthy – and better than many Banks.

Public Shareholding is very less at 20% . Hopefully, the bank will have to divest some more share in favour of the Public like other PSBs some time in future.

ASSET QUALITY :

% of Gross/Net NPA is higher at 0.76 compared to 0.23% in previous Qtr – and compared to 0.4% in corresponding Qtr.

Provisions is a Rs.343.90 Cr – up by 61% from previous Qtr -  and up by a much higher 185% from corresponding quarter – and further higher proportionately by 247.6% from FY2010.    

The Bank says – it has a prudent provisioning policy to provide more than RBI prescription –as below :

Asset classification	Bank’s policy	RBI prescription
Substandard	20%	10% for secured & 20% for Unsecured
D1	100%	20% for secured
D2	100%	30% for secured
D3	100%	100%
Loss	100%	100%

The Bank also says that -

·       Gross NPA stood at 1.45% of Gross advances

·       Net NPA stood at 0.76% of Net advances

·       With this the Provision Coverage Ratio stands at 83.06% as against 70% prescribed by RBI.

On an earlier occasion – the bank had said it wanted a full provision coverage ratio of almost 100%. It is not clear – whether it will move in that direction further in coming quarters.

The additional provisioning is a one time measure and is quite healthy and will guard the Bank against any future failures in Asset quality front.

But, the increase in gross and net NPAs in the current quarter is a matter for some concern. Whether the increase in NPAs is a one time problem limited to this quarter is to be seen. This may well be the case. For instance – the  % of Gross/Net NPA in current Qtr is 0.76% - while the same was 0.23% in Q4 FY10; 0.16% in Q3 FY2010; 0.18% in Q2 FY10; 0.4% in Q1 FY10 and 0.23%  in the whole of FY2010. All other quarters had very low NPAs – except current quarter.

Some Banks like BOI had higher NPAs in more quarters and IOB had higher NPAs on account of acquisition of an ailing co-op Bank for a number of quarters. After the NPAs are booked fully, now these banks are coming back to high Profit zones again.

Queried about the NPAs, the Bank’s CMD is reported to have said as below :

According to Bhasin, part of the reason for the increase in NPA is that the bank has migrated to computer generated NPA data from the manual process which in turn has added a huge amount to the NPA.

"We are the first nationalised bank to generate NPA from core banking solution (CBS). The NPA is now monitored at the head office level under a general manager on a daily basis," he said.

"Though all the branches came under CBS in 2008, a lot of data had to be cleaned. The cleaned up NPA data is what we have declared now," he said

Indian Bank has not talked of any  prolonged NPA difficulties. Assuming the real NPA problem to be limited to this quarter – the bank should climb back to higher profits  very quickly. All of its other parameters are healthy – its increasing business, return on assets, Net interest margin, CASA ratio are all quite HIGH – and improving each quarter.

This needs to be kept in mind by all medium to long term Investors.

NEWS DATED 15th, August,2010:

Indian Bank has entered the104th year of operation on 15th,August,2010. It is planning to open 190 Branches, and 250 ATMs in North, west and Eastern Parts of the country, this year. It also wants to open Branches in Jaffna, Maldives, Vietnam and Hong kong,and a represerntative office in Indonesia.

As on this day - Indian Bank says, it has crossed Rs.1.61 lakh Crores of Business. Deposits have gone up to 93,775 Cr. IB wants to cross Rs.2,00,000 cr business with 2000 Crores net profit in next 12 months. For 2009-10, Net profit was Rs.1,555 Crores.

RESULTS IN FIGURES :

INDIAN BANK	Jun-10	Mar-10	Dif%1	Jun-09	Dif%2	FY10N/C	Dif%3
Interest on Advances	158458	150257.9	5.5	141934.8	11.6	579982.9	9.3
Income on Investments	52623.3	51157.63	2.9	44503.89	18.2	199737.7	5.4
Income on RBIBalances	1097.43	1071.4	2.4	1585.15	-30.8	5985.38	-26.7
Interest Earned	212178.6	202487	4.8	188023.9	12.8	785706	8
Other Income	35545.9	29285.84	21.4	35015.52	1.5	117371.8	21.1
Total Income	247724.6	231772.8	6.9	223039.4	11.1	903077.8	9.7
Interest Expended	119514	109076	9.6	114256.4	4.6	455318.4	5
Employees Cost	32149	21501.81	49.5	34522.72	-6.9	121239.3	6.1
Other Optg Expe.	12279.7	13961.06	-12	11211.55	9.5	51785.33	-5.1
Operating Expenses	44428.8	35462.87	25.3	45734.27	-2.9	173024.6	2.7
Total Exp.xcl.O/E	163942.5	144538.9	13.4	159990.7	2.5	628343	4.4
Operating Profit	83782	87233.89	-4	63048.69	32.9	274734.8	22
Provisions	34390.3	21355.94	61	12085.9	185	39574.06	247.6
Profit before tax	49391.69	65877.95	-25	50962.79	-3.1	235160.7	-16
Tax Expense	12576.8	24881.98	-50	17796.61	-29.3	79662.01	-36.8
P A T	36814.94	40995.97	-10	33166.18	11	155498.7	-5.3
Net Profit	36814.94	40995.97	-10	33166.18	11	155498.7	-5.3
Face Value	10	10	0	10	0	10
Paid-up Equity	42977	42977	0	42977	0	42977
Reserves	-	621725.3		-		621725.3
Dividend%	-	40		-		65
Shares of GOI%	80	80	0	80	0	80
C A R	12.16	12.16	0	13.68	-11.1	12.16
Basic EPS  B EI	8.29	9.27	-11	7.44	11.4	35.09	-5.5
Gross/Net NPA	51139.9	14493.13	253	20589.33	148	14493.13
% of Gross/Net NPA	0.76	0.23	230	0.4	90	0.23
Return on Assets	1.42	1.66	-15	1.54	-7.8	1.67
Public Shareholding (%)	20	20	0	20	0	20	300

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