InvestorQ : Why did the losses of Indian Bank widen during the March 2020 quarter?
Arti Chavan made post

Why did the losses of Indian Bank widen during the March 2020 quarter?

Answer
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3 months ago


South based Indian Bank reported net loss at Rs.217.74 crore for the Mar-20 quarter due to higher bad loan provisions. Indian Bank had posted net loss of Rs.189.77 crore for the Mar-19 quarter. This is a divergence from the Rs.247 crore profits reported in the Dec-19 quarter. Total income for the Mar-20 quarter was 15% higher at Rs.6334 crore.

Provisions for bad loans and contingencies were nearly 16% higher at Rs.1892 crore for the Mar-20 quarter. Indian Bank showed an improvement in gross NPAs which fell from 7.11% to 6.87%. The net NPAs for the quarter were lower by 62 bps at 3.13%. Indian Bank was also hit by a fraud in the power sector where Indian Bank had an exposure of Rs.855 crore.

Indian Bank may have see the worst behind with the NPL Provision Coverage ratio at 73.05% as on March 2020. This means the risk of further escalation of NPAs is quite limited. That also explains why the stock was up by 7% on 23 June at close of trade. The markets are factoring in the possibility that the worst may be over for the stock.