Honda India president Keita Muramatsu (left) and actor Akshay Kumar at the Dream Yuga launch in Gurgaon on Tuesday.
Mumbai:
Indian Bank, a state-owned public sector bank, results for the March 2012 quarter shocked the street. The bank is expected to see Rs 1,000 crore more restructuring and further deterioration in the quality of loans given.
Shares fell over 8 per cent last Friday and a further 2 per cent today.
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Here are takeaways from results that hurt the share price:
- The net interest income stood at Rs 1,082 crore against Rs 1,101 crore in the year ago period. The growth or fall in the net interest income is an indicator of the core business of lending that banks operate in.
- The net profit of the bank fell 21.3 per cent to Rs 345 crore. The net interest margin, the difference between cost of borrowing and lending for banks, fell to 3.2 per cent.
- The bank reported a sharp increase in non-performing assets. This means the company expects to generate little or no interest income on them. Net non-performing assets rose over 201 per cent to Rs 1,197 crore.
- As a result, the bank had to make higher provisioning of Rs 562 crore, up 4.4 times over March 2011. This means the bank has to set aside money to ensure that it has enough capital if these loans go bad.
- Outstanding or restructured assets stood at Rs 8900 cr at the end of March 2012. The bank has witnessed slippages to the tune of Rs 1,010 crore.
- Major accounts restructured during March 2012 quarter include Air India Rs 800 crore and Utta Pradesh State Electricity board at Rs 800 cr.
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