Overview

Indian Bank (NSE:INDIANB) the 7th largest Public Sector Bank in the country which is well known for its digital innovation is a prominent player in handling fund transfer under Direct Benefit Transfer.

Branch Network

Branch network stood at 2887 branches on 31.03.2020, comprising of 740 Rural, 833 Semi urban, 637 Urban and 677 Metropolitan branches. Besides, Bank has 3 overseas Branches Viz., Singapore, Colombo and Jaffna and an IFSC Banking Unit (IBU) at Gift City Gandhi Nagar, Ahmedabad.

Bank has 407 branches in the 356 under banked districts identified by Reserve Bank of India. There are 450 branches in Minority concentrated Districts and 244 branches in the unbanked centres.

Amalgamation of Allahabad Bank into Indian Bank has placed the Bank as the 7th largest Bank with more than Rs 8 lakh crore business, 43,000 strong workforce and over 6000 branch network with a strong CASAbase and commenced operations as merged entity from 01 April 2020.

Product and Services

Products

Loan products

• Agriculture
• Groups
• Personal/Individual
• MSME
• Corporate
• Education
• NRI
• 59 Minutes Loans

Deposit products

• Savings Bank A/c
• Current A/c
• Term Deposits
• NRI A/cs

Digital Products

• POS
• CASH@POS
• IndOASIS
• IB Collect Plus
• IB V Collect Plus
• Internet banking
• Debit Cards
• Credit Cards
• SMS Banking

Services

• Credit Cards
• Premium Services
• Insurance Services
• CMS Plus
• Doorstep Banking
• e Payment of Direct Taxes
• e Payment of Indirect Taxes
• Debenture Trustee

Industry Overview

RBI Monetary Policy

The Reserve Bank of India in its last meeting on 22 May'20 reduced repo rate by 40 basis points to 4% in an effort to further boost liquidity in the economy which has been struggling under the impact of COVID-19 induced countrywide lockdown.¹

The RBI expects headline inflation to continue to soften and fall below its medium term target (4 % with +/- 2 % deviation) in the second half of FY21.

Though RBI refrained from providing any figure for growth, it believed that recovery in economic activity may begin in Q3FY21 and gain momentum in Q4FY21 as supply lines are gradually restored to normalcy and demand gradually revives.

Recent Initiatives by GoI

Union Finance Ministry announced the merger of 10 public sector banks (PSBs) into four.

Collateral free automatic loans worth Rs 3 lakh Cr will be provided to MSMEs with up to Rs 25 Cr outstanding and Rs 100 Cr turnover. This is for 4 year tenure and is 100% guaranteed. These loans can be availed till 31 Oct'20

Fiscal deficit limit of state has been increased from 3% to 5% of GSDP only for FY21 subject to reforms. This will provide extra resources of 4.28 lakh crore to the States.

Banking Sector 2019-20

SCBs deposit growth stood at 9.5% y-o-y in Mar'20 which was higher than the credit growth of 6.4% in the same period.

The CASA ratio for SCBs stood at 42.1% on account of growth in the overall savings deposit at the end of Q4FY20. The savings deposit accounts for 32.9% share in the total deposits while current deposits account for 9.2%.

Financial Highlights

The major highlights of the Bank's performance during FY 20 are as follows:

• Domestic CASA registered a growth of 7.3% YoY and the CASA ratio was maintained at 35.4%. In order to augument the CASA portfolio, Bank has opened 21,56,586 new CASA accounts during FY 20. Facility for online opening of Savings bank account by customers was rolled out during the year and 16,666 accounts have been opened upto 31 March 2020.
• Core Term Deposits posted a growth of 22.9% as against 13.1% in FY 19. Reliance on Bulk deposits (PDs and CDs) has declined significantly and their share to total deposits was at 4.3% as against 11.7% for the previous year.
• Capital Adequacy Ratio (Basel III) was at 14.12% as at March 31, 2020 as compared to 13.21% as at March 31, 2019.
• Gross NPA was at 6.87% as on March 31, 2020 as against 7.11% as on March 31, 2019 while Net NPA was at 3.13% as on March 31, 2020 as against 3.75% as on March 31, 2019.
• Total number of ATMs & BNAs increased to 4149 as on 31 March 2020 from 3892 as on 31 March 2019, which st st includes 695 offsiteATMs / BNAs and 6 mobileATMs.
• During the year 2019-20, total income of the Bank increased by 17.3% to Rs 24,718 Cr, with Interest Income at Rs 21,405 Cr and other Income at Rs 3,313 Cr
• The Bank's total expenditure increased by 12.6% to Rs 18,219 Cr from Rs 16,187 Cr during FY 20.
• Total operating expenses was at Rs 4,421 Cr for FY 20 as compared to Rs 4,020.37 Cr in FY 19.
• Net profit increased to Rs 753 Cr as against Rs 322 Cr for FY19.
• Networth of the Bank stood at Rs 18,357 Cr as on March 31, 2020 from Rs 15,754 Cr as on March 31, 2019.

Indian Bank announces results for Q2 FY21 ²

22, October 2020 Amalgamation of Allahabad Bank into Indian Bank came in to effect on April 1, 2020. Accordingly, the combined financials as on 30th September 2019 and 31st March 2020 have been arrived at by aggregation of audited numbers of combined figures of two banks.

Profitability

• The Bank’s Operating Profit has registered a robust growth of 40%, touching Rs. 2995 crore for the Q2 FY21 as against Rs. 2135 crore for Q2FY20. On a QoQ sequential basis it increased by 9%.
• The Net Profit at Rs. 412crore for Q2 FY21 as against net loss of Rs.1755 crore for Q2 FY20 mainly on account of increase of Non-Interest income by 29%. On a QoQ sequential basis it increased by 12%.
• Net Interest Income (interest income less interest expenditure) rose by 32% for Q2 FY21 to Rs. 4144 crore, from Rs.3139 crore for Q2 FY20. On a QoQ sequential basis it increased by 7%.
• Net Interest Margin (NIM) (Domestic) increased by 39 basis points (bps) and touched 3.06% for Q2FY21 as against 2.67% for Q2FY20. On a Q0Q sequential basis it increased by 23 bps from 2.83% to 3.06%.
• Net Revenues (Net interest income plus other income) for Q2 FY21 grew by 31% and was at Rs.5755 croreas against Rs.4388 crore for Q2FY20. On a QoQ sequential basis it increased by 11%.

Non Interest Income

• Non Interest Income for the quarter ended Q2FY21 was Rs. 1611 crore and increased by 29% over Q2FY20 mainly on the back of fee income, forex income, recovery of bad debts and treasury income. On a QoQ sequential basis it increased by 21%.
• Provisions &Contingencies for Q2 FY21 was at Rs. 2583 crore as against Rs.3890 crorefor the corresponding quarter of previous year. Specific loan loss provisions for Q2FY21 were Rs 1880 crore, compared to Rs 3443 crore in Q2 FY20. On a QoQ sequential basis Total Provisions increased by 8%.
• Operating Expenses for the quarter ended Q2FY21 was Rs.2760 crore as against Rs. 2253 crore during Q2FY20. On a sequential basis it increased by 13% due to provision for wage revision and harmonization of depreciation.

Assets and Liabilities

• Total Balance sheet size grew by 7.75% (Y-o-Y) and was Rs.584880 croreas of Q2FY21 as against Rs.542807 crore as of Q2FY20. On a sequential basis it increased by 1.58%.
• Total Business at Rs.867853 croreas of Q2FY21, recorded a Y-o-Y growth of 5% over Q2FY20. On a sequential basis it increased by 1%
• Total Deposits at Rs.501956 croreas of Q2FY21 recorded a Y-o-Y growth of 7%. On a sequential basis it increased by 3%.

Capital Adequacy

• The Bank’s total Capital Adequacy Ratio (CRAR) as per Basel III guidelines was healthy at 13.64% as at Q2FY21 vs 13.45% as of Q1as against regulatory requirement of 10.875%.
• Tier-I CRAR was at 10.74% as on Q2FY21 Vs 10.30% as on Q1FY21 on sequential basis.

Asset Quality

• Gross non-performing assets were at 9.89% of Gross advances as on Q2FY21 brought down by 275bps from 12.64% as on Q2FY20. On a sequential basis it decreased by 101 bps.
• Net non-performing assets came down to 2.96% as on Q2FY21 from 4.59% of Net advances as on Q2FY20 with a reduction of 163 bps. On a sequential basis it decreased by 80 bps.
• Recovery of Bad debts improved by 38% during Q2 FY21 over Q2 FY20.

MD and CEO’s quote

Commenting on the results, MD & CEO, Ms.Padmaja Chunduru said "This has been a quarter of strong growth in all key parameters. The Bank has recorded 40% growth in Operating profit and earned Net Profit of Rs.412 crores during the quarter. CASA is at a healthy 41%, NIM at 3.06% has seen 23 bps growth over last quarter. GNPA and NNPA have improved to 9.89% and 2.96 %. RAM grew by 5% and now is at 55% of advances

The consolidation of the amalgamation (Allahabad Bank merged into IB with effect from 01.04.20), is progressing very satisfactorily with more than 100 offices merged or rationalised so far.Centralisation of loan processing and IT integration is on track. That the Bank could make such gains in consolidation turning in good earnings and ensuring no disruption to customers during such challenging times, is because of the commitment and hard work put in by its team.

The Bank has continued its digital journey with launch of an All-in-one Application "Ind OASIS". Also the Bank has initiated a Business Mentoring program in vernacular 'MSME Prerana' for its MSME entrepreneurs. The Bank has also recently tied up with IIT Madras Incubation cell for financing start-ups under its "Ind Spring Board' Scheme."

References

1. ^ https://www.bseindia.com/bseplus/AnnualReport/532814/5328140320.pdf
2. ^ https://www.indianbank.in/wp-content/uploads/2019/03/Indian-Bank-announces-results-for-Q2-FY21.pdf