Date:06/11/2004 URL: http://www.thehindubusinessline.com/2004/11/06/stories/2004110602230600.htm

Back Indian Bank posts 32 pc growth in H1 net profit

Our Bureau

Mr M.B.N.Rao

Chennai , Nov. 5

INDIAN Bank has reported a 32 per cent growth in net profits for the first half of the current fiscal at Rs 154.10 crore. The profits were after making substantial provisions of about Rs 350 crore.

These provisions included Rs 110 crore for the likely increase in salary costs, Rs 129 crore for depreciation in value of investment portfolio, Rs 85 crore for general provision and for the first time Rs 30 crore for market risk and contingencies. The bank's net interest income grew 26 per cent to Rs 634 crore.

Announcing the results, Mr M.B.N. Rao, Chairman and Managing Director, said the bank's deposits had grown at 13.74 per cent compared to an industry growth of 6.35 per cent. The bank's advances also grew at 19 per cent compared to 11.5 per cent growth by the banking industry during this period. Deposits were at Rs 33,046 crore while advances were at Rs 16,000 crore as of September.The bank was able to improve its net interest margin marginally at 3.59 per cent. The yield on advances was at 8.45 per cent while the cost of deposits was at 4.76 per cent, down from about 5.61 per cent a year earlier.

Mr Rao said that the retail loans constituted 24 per cent of the loan portfolio and it was expected to touch 33 per cent by the end of the current fiscal. The goal was to reach a retail portfolio of 50 per cent by fiscal 2007, he said. The corporate loan portfolio had also grown in the first half, he said. The bank's net NPA was lower at 2.25 per cent compared to 2.71 per cent for March 2004 and 4.79 per cent a year ago.

. He said that the bank was consciously trying to de-risk its investment portfolio by reducing the holding of long-term bonds.

Asked if the bank would raise lending rates, Mr Rao said, "It is too early to say. Oil prices seem to be coming down after the American election. In that event, inflation may also come down and interest rates may not increase. We would like to wait and watch for some more time."

The bank's capital adequacy ratio had improved to 14.58 per cent. Mr Rao said this was comfortable for the moment, when asked about the bank's plans for an initial public offer.