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Informist, Wednesday, Jan. 29, 2025

By Pratiksha

NEW DELHI – Indian Bank expects deposits and loans to grow 8-10% and 11-13%, respectively, in the financial year ending Mar. 31, the state-owned lender's senior management said in a post-earnings call with analysts Wednesday. "Credit has grown at almost 10% already. In the fourth quarter (Jan-Mar) demand is also higher, so it (FY25 target for credit growth) is achievable," the management said.

The Chennai-based bank's gross advances rose 9.7% on year to INR 5.59 trillion as of Dec. 31. Within domestic loans, retail loans grew at the fastest pace, posting a year-on-year increase of 15.8% at INR 1.15 trillion. Agricultural advances grew 13.5% on year to INR 1.30 trillion, while micro, small, and medium enterprise loans rose 8.2% to INR 900.05 billion.

"Our growth in retail term deposits is at around 8-9%, so we are quite hopeful. It would be good accretion in the fourth quarter (Jan-Mar)," the lender said. Indian Bank's total deposits rose 7.4% on year to INR 7.02 trillion as of Dec. 31, with current deposits growing 5.3% on year to INR 355.99 billion and savings deposits rising 3.5% to INR 2.34 trillion.

The bank's management expects to maintain net interest margin at 3.4-3.5% in FY25 and keep its current account saving account ratio at 40.0%.

"We have been able to maintain that (current account savings account ratio at 40%) and our endeavour will be to maintain CASA at 40%, although that may be a little challenging," it said. The bank's domestic current account savings account ratio fell to 40.00% as of Dec. 31 from 40.47% at the end of the previous quarter and 41.14% at the end of December 2023.

The lender said it expects corporate advances to grow at 8-9%, adding that the Oct-Dec year-on-year rise of 4.5% was an aberration. The bank's corporate loans were at INR 1.85 trillion in the December quarter, as compared with INR 1.78 trillion a year ago.

The lender's liquidity coverage ratio was at 116% as of Dec. 31 and is expected to be impacted by around 8-10 basis points by the Reserve Bank of India's draft guidelines on the same, the management said. The RBI released its draft liquidity coverage ratio guidelines on Jul. 25, proposing that banks assign an additional 5% run-off factor to internet and mobile banking-enabled retail deposits. It also proposed tighter norms for valuing banks' high-quality liquid assets, among other changes. The draft norms are slated to come into effect from Apr. 1.

"On average, our LCR remains approximately 125% and the impact of new (RBI) norms is around 8 to 10 basis points. So, on a particular day I cannot say, but with 125%, even if there is a hit of 10 basis points, then 115% we will be able to maintain. I think that is comfortable," the management said.

Indian Bank expects good income from treasury operations in Jan-Mar. The lender's income from treasury operations was INR 14.78 billion in the December quarter. On Wednesday, shares of the bank closed 6% higher at INR 544.75 on the National Stock Exchange.  End

Edited by Rajeev Pai

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