Indian Bank Targets Up to ₹1,500 Crore Treasury Income in FY27 Following Strong Q1 Performance

Public sector lender Indian Bank is targeting a treasury income of ₹1,000 crore to ₹1,500 crore for the current financial year. The revised outlook follows a better-than-expected realization during the first quarter of the fiscal year.

In an interaction, Indian Bank Managing Director and CEO Binod Kumar noted that the bank had initially anticipated an overall treasury income of ₹300 crore for the first quarter, but ultimately earned ₹500 crore. Treasury income for the lender comprises two primary components: trading income and interest income from investments.

Regarding asset quality management, the bank aims to reduce its gross non-performing assets (NPAs) to between 1.5% and 1.6% of total advances by the end of the financial year. Additionally, net NPAs are targeted to be brought down to 0.15% to 0.2%. As part of its asset quality strategy, the lender also plans to undertake the sale of ₹200 crore in bad loans to an asset reconstruction company (ARC) during the current financial year.

On the asset side, Indian Bank expects its gold loan book to exceed ₹1.5 lakh crore in the current financial year, supported by steady demand. Kumar pointed out that gold loans function as safe lending instruments that help small businesses grow rather than acting purely as consumption loans. While the segment witnessed a significant growth of 30% last year driven by rising gold prices, growth is expected to moderate to around 20% this year due to a 30% decline in gold prices, with expansion driven primarily by tonnage. The bank's current gold loan portfolio stands at approximately ₹1.25 lakh crore.

The bank's credit portfolio currently maintains a distribution where Retail, Agriculture, and MSME (RAM) sectors constitute 65% of the overall loan book, while corporate loans account for the remaining 35%. Kumar stated that the lender intends to maintain this ratio moving forward, citing substantial growth capacity and opportunities within the agriculture and MSME segments.

"Indian Bank's focused approach on maintaining a balanced portfolio between RAM sectors and corporate lending, alongside disciplined asset quality management, reflects a stable operational strategy. Targeting specific reductions in gross and net NPAs while leveraging secured lending segments like gold loans demonstrates sound risk management. For the broader financial ecosystem, this highlights how traditional public sector lenders are effectively managing treasury performance and portfolio growth amid fluctuating market conditions." — Dr. Shishir Gupta, Founder & CEO, StartupLanes