Indian Bank ropes in minority partner to revive defunct housing finance subsidiary

Indian Bank ropes in minority partner to revive defunct housing finance subsidiary

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Kolkata: State-owned Indian Bank has decided to rope in a minority partner for Ind Bank Housing to revive the now defunct housing finance subsidiary. The bank is also planning to infuse capital in the company where it holds a 51 per cent stake.The bank chief executive Padmaja Chunduru said that it would soon start the groundworks to divest a part of its holding.

“We are looking at a strategic partner to bring in management competencies as well as capital. We would also likely infuse capital, subject to Reserve Bank of India‘s permission, since we believe there would be value in it,” Chunduru said Friday, responding to ET’s query.

The bank has three subsidiaries including Universal Sompo General Insurance and Ind Bank Merchant Banking Services.

“Unlocking value in subsidiaries” has been listed as part of the bank’s future focus in its annual report for FY20. Universal Sompo has become a subsidiary too in the virtue of its merger with Allahabad Bank.

Allahabad Bank, in its earlier avatar, was looking to divest a part of its 28.52 per cent stake in the general insurance joint venture where overseas partner Sompo Japan Nipponkoa Insurance holds 34.61 per cent. Indian Overseas Bank (18.06 per cent), Karnataka Bank (6 per cent) and Dabur Investment Corporation (12.81 per cent) are other partners.

“We are in no real hurry to divest the stake in the JV. We are happy with the way Universal Sompo is performing. Our priority right now is to help it achieve its full potential,” Chunduru said.

Chennai-based Indian Bank, meanwhile, reported Rs 369 crore net profit and Rs 2753 crore operating profit for the first quarter to June. This is the first financial result after its merger with Allahabad Bank and therefore the performance is not comparable with Indian Bank’s standalone net profit of Rs 365 crore and operating profit of Rs 1374 crore.

Its net interest margin, a key financial parameter, dipped four basis points to 2.83 per cent. The bank is aiming to improve its by about 10 bps by the end of this fiscal.

After merger, Indian Bank’s asset quality deteriorated with gross non-performing assets standing at 10.9 per cent at the end of June compared with 7.33 per cent a year back. Net NPA ratio was at 3.76 per cent as against 3.84 per cent over the same period.

Credit: Stocks-Markets-Economic Times

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