Indian Bank jumps 7% after lower provisions lift Q1 profit, but slippages remain elevated

Domestic net interest margin contracted 10bps sequentially and 29bps YoY to 2.85 percent in the quarter ended June 2019

Indian Bank shares rallied 6.7 percent intraday on August 6 after lower provisions and other income lifted June quarter profitability 75 percent year-on-year, but slippages remain elevated on a sequential basis.

The stock has fallen nearly 50 percent in the last one year, but August 6 gain was in addition to the 3.5 percent upside seen in the previous session. It was quoting at Rs 199.75, up to Rs 9.85, or 5.19 percent, on the BSE at 1049 hours.

Profit in the June quarter increased sharply by 74.6 percent year-on-year to Rs 365.4 crore, but net interest income fell 1.2 percent YoY to Rs 1,785.4 crore due to higher cost of funds and elevated slippages in Q1.

Slippages for June quarter stood at Rs 1,077 crore, rising 7.2 percent sequentially, though declined more than 22 percent year-on-year. Annualised slippage ratio jumped to 2.34 percent in Q1 against 2.14 percent in the previous quarter.

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