Indian Bank expects the bank's net interest margin, or NIM, to expand by 5 to 6 basis points following a 25-basis-point repo rate hike, while it has raised its FY27 advances growth guidance to 13% to 14%, Managing Director and CEO Binod Kumar told NDTV Profit in an interview on Friday.
The public sector lender has also raised its deposit growth guidance to 11% to 12% from 9% to 11% earlier, while aiming to maintain its current account and savings account, or CASA, ratio at around 40%.
The guidance follows Indian Bank's September quarter results, announced on Thursday, when net profit rose 14.7% year-on-year to Rs 3,462 crore, and net interest income increased 18% to Rs 7,719 crore.
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Indian Bank Expects NIM Expansion
Kumar said domestic NIM increased by 1 basis point in the September quarter, while global NIM expanded by 2 basis points. The yield on advances rose by 8 basis points, while the cost of deposits increased by 9 basis points.
Although deposit rates could harden further, Kumar expects the impact of the 25-basis-point repo rate hike to support margin expansion of 5 to 6 basis points.
Deposit Growth Guidance Raised
Kumar also pointed out that while deposits grew 12.5% year-on-year in the September quarter, the domestic CASA ratio slipped marginally to 39.36% from 39.73% in June.
Kumar attributed the CASA ratio decline to an increase in foreign currency non-resident, or FCNR, deposits. CASA grew 13.77%, with savings account deposits rising more than 11% and current account deposits increasing over 27%. He reiterated the target of maintaining a CASA ratio of around 40%.
Indian Bank Targets Rs 3,500 Crore ECL Provisions
Kumar expects credit costs to remain around 0.22% to 0.23% in the coming quarters. He also said the increase in provisions reflected the bank's preparation for the expected credit loss provisioning framework.
Against an estimated ECL provisioning requirement of Rs 3,500 crore, Indian Bank provided Rs 1,000 crore in the June quarter and around Rs 1,500 crore in the September quarter, taking the cumulative amount to Rs 2,500 crore.
The bank aims to complete the Rs 3,500 crore provisioning by March 2027 to limit the impact in the next financial year.
Also Read: Indian Bank Q2 Results: Net Profit Rises 15% To Rs 3,462 Crore; NII Jumps 18%
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