Indian Bank - 1QFY2014 Result Review - Angel Broking

Indian Bank reported weak operating performance for the quarter. NII for the bank expectedly de-grew by 4.9% yoy to Rs. 1,097cr. Non-interest income grew strongly by 137.8% yoy to Rs. 530cr, probably boosted by treasury gains. Overall, pre-provisioning profit for the bank grew marginally by 2.3% yoy to Rs. 859cr. On the asset quality front, the bank witnessed asset quality stress during the quarter, as Gross and Net NPA levels increased sequentially by around 4.4%. Provisioning expenses for the bank more than doubled on a yoy basis, and hence earnings de-grew by 31.3% yoy. We believe that the asset quality stress for the banking sector is unlikely to abate as quickly as was expected earlier.

At CMP, the stock trades at 0.3x FY2015E ABV. We maintain our Neutral recommendation on the stock.

Source : Equity Bulls

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