Indian Bank Q4 Profit Drops 7.1% YoY

Indian Bank, one of the midsized public sector banks reported a bad set of financial numbers in its fourth quarter of FY14. Net profit of the bank has dropped by 7.1% on yearly basis to Rs 271.3 crore for Q4FY14. Fall in the net interest income (NII), other income and increase in provisions & contingencies led to such fall in the net profit of the bank. 

Net interest income of the bank for Q4FY14 stood at Rs 1077 crore compared to Rs 1107 crore posted in the same quarter last year. Increase in non-performing assets has depressed the income earned by the bank, which grew by mere 9.8% on yearly basis to Rs 3910 crore for Q4FY14, whereas the interest expended has increased by 15% in the same period and stood at Rs 2833 crore for Q4FY14. Other income of the bank that forms around 10% of total income fell by 29.6% on yearly basis to Rs 324.14 crore. In addition to these, rise in provision & contingencies by 25% to Rs 593.92 crore led the fall in net profit of the bank. However, employee cost of the bank has decreased by 43.5% on yearly basis to Rs 441.25 crore for Q4FY14, which helped bank to arrest its fall in the profit. 

The asset quality of the bank continues to deteriorate. Gross non-performing assets (NPAs) and net NPA of the bank has increased by 19% and 11% on sequential basis to Rs 4562 crore and Rs 2763 crore respectively for Q4FY14. As ratio of gross advances and net advances again it has shown signs of increasing stress. Gross NPA ratio is up by 25 basis points to 3.67% at the end of quarter ending March 2014 whereas net NPA ratio is up by one basis to 2.26% in the same period.

Post these results, share price of the bank fell from Rs 125 to Rs 119 per share before closing at Rs 121.5 down by 0.85% from its previous closing. The current book value per share of the bank discounts the current market price of each shares by little less than 0.5 times.