- Indian Bank targets 16% credit growth driven by green energy and data centres
- Credit growth funded through CASA and bulk deposits, says MD Binod Kumar
- Bank achieved $2.4 billion FCNR-B deposits, exceeding $2 billion target
Indian Bank In Focus: Indian Bank is looking to step up credit growth to 16–17%, from its earlier guidance of 13–14%, with the lender seeing strong lending demand from emerging sectors such as green energy and data centres, Managing Director and CEO Binod Kumar said.
Kumar told NDTV Profit that around 30% of the $2.4 billion raised through FCNR-B deposits could be deployed towards credit growth, while nearly 70% could be used for bulk-deposit management. He said the bank is seeing strong system-wide credit growth of around 18%, prompting it to raise its own credit growth guidance.
On the deposit side, Indian Bank had initially targeted FCNR-B flows of $1.5 billion before raising the target to $2 billion. The lender has now mobilised $2.4 billion, with Kumar saying the bank remained cautious about the quality and source of deposits rather than simply maximising inflows.
The deposits have primarily come from the Middle East and other developed economies, including Singapore, while the bank has also attracted some new customers. Kumar said Indian Bank has been particularly careful about the net worth of depositors and the source of funds.
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Around 40% of the $2.4 billion FCNR-B deposits are leveraged, although Kumar said the bank has been selective in allowing loans against deposits. He cited customers with an existing relationship with the bank as an example where such leverage had been permitted.
Kumar said Indian Bank is offering around 6% on FCNR-B deposits, while loans against these deposits are being priced at roughly 5.5–5.6%. However, he does not expect the higher-cost deposits to materially impact the bank's net interest income or net interest margin.
According to Kumar, the average cost of bulk deposits is around 6.5–6.6%, while the all-in cost of FCNR-B deposits, including swaps, is around 6.4–6.5%. As a result, he expects the impact on NII and NIM to be limited to around 1–2 basis points either way.
On the lending side, Kumar said Indian Bank is seeing strong demand from green-energy projects, including battery storage, solar-panel manufacturing and cell manufacturing. The bank is also seeing increasing traction in data centres, with Middle East-linked demand supporting the sector and newer players with established track records in other businesses entering the space.
Kumar, however, said the bank will remain selective in deploying funds and will avoid lending aggressively in businesses where pricing and costs are highly sensitive.
That said, on the bourses, Indian Bank shares rose up to 3.21% to hit an intraday high of Rs 906.25 per share. At 12:33 pm, the stock was trading 1.92% higher at Rs 894.85 per share. In comparison, BSE Sensex was trading flat at 76,593 levels.
Financially, Indian Bank reported a 10% YoY increase in Q1FY27 net profit to Rs 3,273 crore. Net interest income rose 17% to Rs 7,435 crore, while operating profit increased 16.5% to Rs 5,557 crore.
Asset quality also improved during the quarter, with gross NPA declining to 1.86% from 1.98% sequentially, while net NPA remained at 0.15%.
With credit growth guidance now raised to 16–17%, a sizeable portion of the FCNR-B mobilisation earmarked for bulk-deposit management and demand emerging from green energy and data centres, the lender's ability to scale loans while maintaining pricing discipline and protecting margins will be a key monitorable going ahead.
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