Indian Bank reports strong first quarter earnings for FY 2024-25

Indian Bank has announced a remarkable performance for the first quarter of the fiscal year 2024-25, showcasing significant growth across several financial metrics. The bank’s net profit surged by 41% year-on-year (YoY), reaching ₹2,403 crore in June 2024, up from ₹1,709 crore in June 2023. This impressive increase reflects the bank’s robust financial health and strategic operational improvements.

Operating Profit and Interest Income Surge

Indian Bank‘s operating profit for the quarter improved by 9% YoY to ₹4,502 crore, up from ₹4,135 crore a year earlier. The growth in operating profit is attributed to a strong performance in net interest income, which rose by 8% YoY to ₹6,178 crore, compared to ₹5,703 crore in June 2023. The bank’s fee-based income also saw a notable increase of 17% YoY, reaching ₹788 crore, up from ₹671 crore the previous year.

Enhanced Returns and Growing Advances

The bank’s return on assets (RoA) increased by 25 basis points (bps) YoY to 1.20%, up from 0.95% in June 2023. Return on equity (RoE) showed a substantial rise, up by 188 bps YoY to 19.76%, compared to 17.88% a year ago. The yield on advances (YoA) improved by 16 bps YoY to 8.69%, while the yield on investments (YoI) increased by 43 bps YoY to 7.15%.

Advances and Deposits Growth

Gross advances rose by 12% YoY to ₹5,39,123 crore, up from ₹4,79,404 crore in June 2023. Retail, agriculture, and micro, small, and medium enterprises (RAM) advances grew by 13% YoY to ₹3,13,301 crore. RAM advances now constitute 62% of the bank’s gross domestic advances. Specifically, home loans grew by 13% YoY, while auto loans saw a substantial increase of 55% YoY. Priority sector advances accounted for 43% of the Adjusted Net Bank Credit (ANBC), surpassing the regulatory requirement of 40%.

Deposits also showed a strong performance, with a 10% YoY increase to ₹6,81,183 crore, up from ₹6,21,539 crore. Both current and savings deposits grew by 5% and 6% YoY, respectively. The domestic CASA (Current Account Savings Account) ratio stood at 41%, while the credit-deposit (CD) ratio was 79%.

Improved Asset Quality and Capital Adequacy

The bank’s gross non-performing assets (GNPA) decreased by 170 bps YoY to 3.77% from 5.47% in June 2023. Net non-performing assets (NNPA) reduced by 31 bps YoY to 0.39%. The provision coverage ratio (PCR) improved by 156 bps YoY to 96.66%. The capital adequacy ratio increased by 69 bps to 16.47%, with the CET-I (Common Equity Tier I) ratio rising by 111 bps YoY to 13.42%.

Quarterly Comparisons and Digital Expansion

Compared to the previous quarter ending March 2024, the net profit for Q1FY25 increased by 7% QoQ, and operating profit improved by 5% QoQ. The net interest income also grew by 3% QoQ. Asset quality saw an improvement, with GNPA and NNPA both decreasing on a quarterly basis.

The bank has also made strides in digital banking, generating ₹36,678 crore through digital channels in Q1FY25. The number of mobile banking users grew by 33% YoY to 1.75 crore, while UPI users and net banking users increased by 30% and 26% YoY, respectively. The number of credit card users rose by 40% YoY to 2.38 lakh, and the total number of PoS terminals increased by 66% YoY to 21,656.

Expert Opinions

Financial analysts have noted the strong performance of Indian Bank, particularly highlighting the impressive growth in net profit and advances. Experts attribute this success to the bank’s strategic focus on retail and priority sector lending, as well as its effective cost management and digital transformation initiatives.