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Dolat Capital Report
Indian Bank reported a good quarter with strong recoveries, contained slippages, and sequential rise in provision coverage ratio benefitting asset quality.
Net interest margin increase of 10 basis points was limited by high interest reversals from agri slippages and restructured accounts. Loan growth at 3.5% QoQ was led by risk assessment model segment.
Slippages at 2.4% were lower than expected, with sharp decline in micro small and medium enterprise slippages. However, the bank's restructured book at ~4% is higher versus peers and slippages from the same remains a monitorable.
Industry best provision coverage ratio at 81%, limited corporate stress, and continued recoveries will continue to benefit credit costs (at 150 bps for FY24E) even as the bank's MSME book remains a monitorable.
Indian Bank continues to have a healthy capital position and superior core pre-provision operating profit metrics versus public sector undertaking peers.
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