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Informist, Wednesday, Jul. 23, 2025

 

By Pratiksha

 

NEW DELHI - Indian Bank's net profit is seen rising on year in the quarter ended June on stable asset quality and loan growth. However, a contraction in net interest margin may eat into the lender's bottom line. 

 

The Chennai-based bank's net profit is likely to rise 16.3% on year to INR 27.95 billion in the June quarter, according to an average of estimates from five brokerages. Sequentially, however, the state-owned bank's net profit may decline 5.5%. The estimates for net profit of the bank in Apr-Jun range from INR 25.49 billion to INR 30.16 billion.

 

The lender is scheduled to announce its earnings for the June quarter on Thursday. Shares of the lender have risen 10% since it declared its earnings for the March quarter on May 3. At 1140 IST, shares of the bank were 0.8% lower at INR 623.20 on the National Stock Exchange.

 

Indian Bank's gross advances grew 11.3% on year to INR 6.00 trillion as on Jun. 30, according to provisional data disclosed by the lender earlier this month. The bank's total deposits at the end of June were INR 7.44 trillion, up 9.3% on year. In the March quarter, the bank's deposits had grown 7% on year to INR 7.37 trillion and advances had risen 10% to INR 5.88 trillion.

 

The lender's asset quality is expected to stay steady in the reporting quarter. Motilal Oswal Financial Services Ltd. sees Indian Bank's net non-performing asset ratio at 0.2% as on Jun. 30, down from 0.4% a year ago and 0.2% a quarter ago. It expects the gross non-performing asset ratio at 3.1%, down from 3.8% a year ago and the same as a quarter ago.

 

YES Securities Ltd. expects the state-owned bank's slippages to be lower on a sequential basis in the June quarter. However, Emkay Global Financial Services Ltd. sees agricultural slippages to be on the higher side. In the previous quarter, the bank had recognised fresh slippages of INR 13.93 billion, up 12.5% on year. 

 

All the five brokerages expect the lender's net interest margin to contract on a sequential basis in the reporting quarter, primarily due to the Reserve Bank of India's Monetary Policy Committee cutting the repo rate by 100 basis points in 2025 so far. According to Emkay Global, the bank's net interest margin is expected to fall 10 bps on quarter and 17 bps on year to 3.4% in Apr-Jun. "A sharp rate cut, coupled with agri slippages, could weigh on margins but better treasury gains and lower credit cost should help the bank clock more than 1% RoA (Return on Assets)," Emkay said in its pre-earnings report. 

 

The bank's net interest income is seen rising 3.6% on year to INR 63.97 billion in the June quarter, according to the average of estimates of five brokerages. The estimates for net interest income in the quarter range from INR 62.42 billion to INR 65.17 billion. "NII (net interest income) growth will be slower than average loan growth due to fall in yield on advances outpacing cost of deposits," YES Securities said in its pre-earnings report. 

 

As per YES Securities, the lender's provisions are expected to be higher on a sequential basis in the reporting quarter due to a write-back of standard provision in the previous quarter. Indian Bank's provisions and contingencies were down 36% on year and 25% on quarter at INR 7.95 billion during Jan-Mar. 

 

Eight brokerages have a "buy" rating on Indian Bank's stock with an average target price of INR 690 per share. None of the brokerages have a 'sell' rating on the lender. 

 

Following are the Apr-Jun earnings estimates for Indian Bank based on reports from five broking firms in descending order of net profit estimates:

 

Brokerage firm	NII (in INR million)	Net profit(in INR million)
YES Securities (India) Ltd.	65,171.00	30,163.00
Motilal Oswal Financial Services Ltd.	64,200.00	28,392.00
Anand Rathi Share and Stock Brokers Ltd.	63,739.00	28,364.00
Emkay Global Financial Services Ltd.	64,342.00	27,330.00
Dolat Capital Market Pvt Ltd.	62,419.00	25,490.00
Average	63,974.20	27,947.80

 

 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Subhojit Sarkar

 

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