Earnings Outlook
Indian Bk Oct-Dec PAT seen up 20% on decline in provisions
This story was originally published at 20:25 IST on 27 January 2025
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By Pratiksha
NEW DELHI - Indian Bank's net profit is seen rising 19.9% on year to INR 25.41 billion for the quarter ended December on the back of a decline in provisions, according to an average of estimates of four brokerages. The bank reported a net profit of INR 21.19 billion a year ago and INR 27.06 billion in the previous quarter.
The estimates for net profit of the bank in Oct-Dec range from INR 24.36 billion to INR 26.60 billion. The Chennai-based bank is scheduled to announce its earnings for the December quarter on Wednesday.
Motilal Oswal Financial Services Ltd. expects the state-owned bank's provisions to decline 19.3% on year to INR 10.90 billion in Oct-Dec from INR 13.49 billion in the corresponding quarter a year ago. Provisions and contingencies fell 29.1% on year to INR 10.99 billion in Jul-Sept.
Steady growth in loans is also expected to boost the bottom line. Indian Bank's gross advances rose 9.6% on year to INR 5.59 trillion as on Dec. 31, as per provisional figures released by the bank on Jan. 6. Total deposits were up 7.3% on year to INR 7.02 trillion at the end of December.
The bank's net interest income is seen rising 8.4% on year to INR 63.02 billion in the quarter ended December, according to the average of estimates of the four brokerages. The estimates for net interest income in the quarter range from INR 62.47 billion to INR 63.49 billion. "NII (net interest income) growth will broadly be in-line with the average loan growth as the rise in yield on advances to be in tandem with the rise in cost of deposits," YES Securities said in a pre-earnings report.
The bank's asset quality is expected to improve in the reporting quarter, according to Motilal Oswal Financial Services Ltd. The brokerage house expects the gross non-performing asset ratio to decline to 3.3% as of Dec. 31, as compared to 3.48% as of Sept. 30 and 4.47% as of December-end 2023. The net non-performing asset ratio is seen at 0.3% as of Dec. 31, broadly unchanged from 0.27% at the end of the previous quarter and down from 0.53% at the end of December 2023.
Most brokerages expect the lender's net interest margin to be stable on a sequential basis. "Credit growth has moderated a bit, but the bank expects NIM to remain range-bound and deliver >1% RoA (return on assets)," Emkay Global Financial Services said in a pre-earnings report. Indian Bank's net interest margin as of Sept. 30 was 3.39%.
The public-sector bank's slippages are expected to be broadly stable on a sequential basis, as per YES Securities. The bank recognised fresh slippages worth INR 13.57 billion in Jul-Sept.
On Monday, shares of Indian Bank closed 0.5% lower at INR 498.55 on the National Stock Exchange of India. Following are the Oct-Dec earnings estimates for Indian Bank based on reports from four brokerage firms in descending order by the estimate of net profit:
Brokerage firm | NII (in INR million) | Net profit(in INR million) |
Emkay Global Financial Services Ltd. | 62,469.00 | 26,603.00 |
Motilal Oswal Financial Services Ltd. | 63,430.00 | 25,814.00 |
Anand Rathi Share and Stock Brokers Ltd. | 62,682.00 | 24,872.00 |
YES Securities (India) Ltd | 63,491.00 | 24,360.00 |
Average | 63,018.00 | 25,412.25 |
End
Edited by Vandana Hingorani
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