State-run Indian Bank on Thursday reported a standalone profit after tax of Rs 412 crore in the quarter ended September, helped mainly by fee income, treasury profits and lower bad loans. The bank amalgamated Allahabad Bank with itself with effect from April 1, 2020.

In the year-ago quarter, the amalgamated entity had reported a net loss of Rs 1,755 crore. The pre-amalgamated profit of the bank in July-September quarter of 2019-20 stood at Rs 358.56 crore. ”All the key parameters showed good improvement during the quarter. Both in terms of asset quality and capital, and also other ratios like return on assets, the bank is placed very well in the second quarter,” the lender’s managing director and CEO Padmaja Chunduru told reporters.

The coming together of both the banks has brought in certain synergies and benefits. Allahabad Bank had huge SLR (statutory liquidity ratio) portfolio and their CASA (current account savings account) ratio was high, and these two brought in benefits on the interest expenses side, she added. ”Even though the rate of interest was falling, our interest income has risen. Non-interest income also showed good improvement,” she said.

Net interest income (interest income less interest expenditure) rose 32 percent to Rs 4,144 crore during the quarter from Rs 3,139 crore in the same quarter a year ago. Domestic net interest margin (NIM) increased by 39 basis points (bps) to 3.06 percent from 2.67 percent.

Non-interest income in Q2 FY21 rose 29 percent to Rs 1,611 crore, mainly on the back of fee income, forex income, recovery of bad debts and treasury income. Fee income was up 29 percent to Rs 665 crore from Rs 516 crore.

Under the Reserve Bank of India’s one-time restructuring scheme, the bank has restructured 81 retail accounts worth Rs 26.84 crore so far. ”Corporates are coming (for one-time restructuring), but in a trickle. We have received 7-8 applications from corporates…but since they are consortium accounts, we have sent to consortium leader,” Chunduru said.

Gross non-performing assets (NPA) of the bank stood at 9.89 percent, while net NPAs improved to 2.96 percent. Chunduru said she expects gross NPA to be below 10 percent and net NPAs under 3 percent in this fiscal.

Provisions and contingencies for Q2 FY21 stood at Rs 2,583 crore as against Rs 3,890 crore during the corresponding quarter of previous year. Specific loan loss provisions were at Rs 1,880 crore as compared to Rs 3,443 crore in Q2 FY20.

Fresh slippages in the quarter were at Rs 249 crore, which were from the bank’s foreign book, she said. During the reporting quarter, cash recovery was at Rs 795 crore and the bank upgraded Rs 195 crore of loans.

The total capital adequacy ratio (CRAR) as per Basel III guidelines stood at 13.64 percent as of Q2 FY21. Tier-I CRAR stood at 10.74 percent. Advances grew by 2 percent to Rs 3,65,896 crore and deposits rose 7 percent to Rs 5,01,956 crore.

The bank expects a credit growth of 10 percent in the current financial year. Shares of Indian Bank on Thursday closed 2.74 percent higher at Rs 61.95 apiece on the BSE.