Indian Bank reports 35% surge in Q3 profit as strong loan growth drives earnings
Indian Bank has delivered a strong financial performance in the third quarter of FY 2024-25, posting a 35% year-on-year (YoY) increase in net profit. The bank’s earnings growth was fueled by higher loan demand, improved asset quality, and a rise in fee-based income. The lender reported a net profit of ₹12,852 crore for the quarter ended December 31, 2024, compared to ₹12,119 crore in the corresponding period last year.
The bank’s robust quarterly financial performance reflects steady profit growth trends driven by an expansion in gross advances, which increased by 10% YoY. A rise in net interest income (NII) and cost optimization further contributed to higher earnings. With asset quality indicators improving, Indian Bank appears well-positioned for sustained growth in the coming quarters.
How Did Indian Bank’s Profit Grow 35% in Q3?
Indian Bank’s earnings growth in Q3 was supported by multiple factors, including higher interest income, cost efficiencies, and increased lending across key sectors.
- Net interest income (NII), a crucial driver of profitability, increased by 10% YoY to ₹16,415 crore in Q3, compared to ₹15,815 crore in the same period last year. This reflects higher loan yields and an expanded credit portfolio.
- Operating profit rose by 16% YoY to ₹14,749 crore, highlighting the bank’s improved operational efficiency and revenue generation.
- Fee-based income grew by 9% YoY to ₹1,931 crore, demonstrating strong non-interest revenue streams.
- Return on assets (RoA) improved by 28 basis points (bps) to 1.39%, reflecting stronger profitability in relation to the bank’s asset base.
- Return on equity (RoE) rose by 108 bps to 21.00%, indicating higher shareholder returns.
The bank’s performance showcases strong profit growth trends, with a combination of increased lending activity and prudent cost management driving higher earnings.
What Contributed to Indian Bank’s Loan Growth?
A key factor behind Indian Bank’s quarterly financial performance was the expansion in gross advances, which grew 10% YoY to ₹15,59,199 crore.
- Retail, agriculture, and MSME (RAM) lending grew by 13%, with home loans increasing by 12% YoY. This reflects rising demand for credit in housing and small business sectors.
- Priority sector lending accounted for 43.85% of adjusted net bank credit (ANBC), exceeding the regulatory requirement of 40%. This underscores the bank’s commitment to financial inclusion.
- Total deposits increased by 7% YoY to ₹17,02,282 crore, driven by strong growth in current, savings, and CASA (current account, savings account) deposits.
- The domestic CASA ratio stood at 40%, reflecting a stable base of low-cost deposits.
The bank’s credit-to-deposit ratio remained strong at 79.63% as of December 31, 2024, signifying a balanced approach to lending and liquidity management.
How Has Indian Bank Strengthened Asset Quality?
Indian Bank’s earnings growth in Q3 was also supported by a marked improvement in asset quality. The bank reduced its gross non-performing asset (GNPA) ratio to 3.26%, down 121 bps from 4.47% a year earlier.
- Net NPA fell to 0.21% from 0.53%, demonstrating improved loan recoveries and reduced stress in the credit portfolio.
- The provision coverage ratio (PCR) increased to 98.09%, up from 95.90%, indicating a strong risk buffer.
- Slippage ratio improved to 0.78% from 1.28% YoY, reflecting a decline in new loan defaults.
The improvement in asset quality suggests Indian Bank’s proactive risk management strategies are yielding results. A stronger balance sheet positions the bank for sustainable profit growth trends in the future.
What Are Indian Bank’s Capital Strength and Earnings Outlook?
Indian Bank maintained a strong capital position, with its capital adequacy ratio (CAR) rising to 15.92%.
- Common Equity Tier 1 (CET-1) capital improved to 13.27%, ensuring financial stability and compliance with regulatory requirements.
- Tier 1 capital rose to 13.77%, reflecting strengthened capital buffers.
- Earnings per share (EPS) increased by 26% YoY to ₹184.70, indicating higher profitability per share.
The bank’s capital strength, coupled with steady profit growth trends, enhances its ability to support future expansion and digital banking initiatives.
How Is Indian Bank Expanding Digital Banking Services?
Indian Bank continues to invest in digital transformation, enhancing customer experience and transaction efficiency.
- ₹1,18,981 crore in digital transactions were recorded in the first nine months of FY 2024-25.
- Mobile banking users grew by 18% YoY to 1.86 crore, reflecting increasing adoption of digital services.
- UPI transactions surged by 24% YoY, while net banking users grew by 9%.
- Credit card users increased by 52% YoY, with transactions at point-of-sale (PoS) terminals rising by 23%.
With a strong focus on digital banking, Indian Bank is positioning itself for sustained growth in an increasingly tech-driven financial ecosystem.
What Awards and Recognitions Has Indian Bank Received?
Indian Bank’s quarterly financial performance and digital innovation have been recognized with multiple industry awards:
- SKOCH Award for “Project WAVE”, recognizing its digital transformation initiatives.
- “Best Public Sector Bank” award at the Tamil Nadu Leadership Awards 2024.
- IBA Banking Technology Award for excellence in digital sales, payments, and AI adoption.
- Best Cloud Initiative of the Year at the BFSI Technology Excellence Awards 2024.
These accolades reflect the bank’s commitment to technological advancement and customer-centric banking solutions.
What Is Indian Bank’s Growth Outlook?
Looking ahead, Indian Bank remains focused on expanding credit growth, improving asset quality, and accelerating digital transformation.
- The bank aims to enhance MSME lending and retail banking while maintaining robust risk management frameworks.
- Digital banking expansion will continue, with an emphasis on seamless customer experience and financial inclusion.
- With a strong capital position and improved profitability, Indian Bank is poised for sustained growth in the upcoming quarters.
Indian Bank’s earnings growth in Q3 reaffirms its position as a leading public sector bank, delivering consistent value to stakeholders while embracing innovation.
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