Indian Bank Q3 Net Profit declines by 20% to Rs 264.5 crore

Indian Bank, one of the south based nationalised banks, has posted its third quarter of FY14 results today (January 23, 2014). Although, operating performance of the bank has been disappointing the asset quality of the banks has shown improvement on sequential basis. 

Net interest income (NII) of the bank has dropped by 4.7% on yearly basis and remained flat on sequential basis to Rs 1090.65 crore for Q3FY14. Other income which forms around 6% of total income increased by mere 1.6% and was at Rs 242.57 crore for Q3FY14. Dismal performance in the NII, muted performance in other income and higher other operating expenses led to huge drop in operating profit of the bank. Operating profit of the bank has dropped by 15% and 10% on yearly and quarterly basis respectively and stood at Rs 632.25 crore for the quarter ended December 2013.
The net profit of the bank too has seen quarterly as well as yearly drop of 13% and 20% respectively. The net profit of the bank was at Rs 264.5 crore for Q3FY14.

The asset quality of the bank has improved on sequential basis. Gross non-performing assets (NPA) and net NPA of the bank has declined on sequential basis by 8% and 11% respectively. The gross NPA and net NPA as percentage of gross advances are reduced by 34 basis points and 31 basis points respectively. The provision coverage ratio of bank as on December 31, 2013 stands at 57.99%. 

Currently shares of the bank are trading at price to book value of 0.45 times, though, it looks attractive we maintain our cautious view on the entire PSU bank as of now.