1. IDBI Bank profit flat at Rs 120 cr as bad loans mount

IDBI Bank profit flat at Rs 120 cr as bad loans mount

State-run lender IDBI Bank today reported a flat net profit at Rs 120 crore in the three months to September on account of higher provisioning for bad loans.

By: | Published: November 4, 2015 9:29 PM
idbi bank

IDBI bank didn’t sell any bad loans to asset reconstruction firms in this fiscal so far. (PTI)

State-run lender IDBI Bank today reported a flat net profit at Rs 120 crore in the three months to September on account of higher provisioning for bad loans.

The bank had posted a net profit of Rs 118 crore in the same period last year.

“Despite a rise in other income and operating profit, our profit is flat because we had higher provisioning,” Deputy Managing Director B K Batra told reporters here today.

Its provisions increased to Rs 1,399 crore from Rs 1,078 crore last year.

The operating profit grew by 27 per cent to Rs 1,519 crore from Rs 1,197 crore last year. Net interest margins increased to 2.06 per cent from 1.93 per cent, while the core net interest income rose 15 per cent to Rs 1,612 crore from Rs 1,406 crore.

Gross non-performing loans rose to 6.92 per cent from 5.72 per cent, while net NPA, too, rose to 3.16 per cent from 2.79 per cent.

“There are certain accounts which have slipped, but if you look at the incremental slippages or the incremental NPAs, the rate has actually come down from March onwards. Those accounts which we are trying to save all these days were getting saved or were on the brink of becoming NPAs, this quarter they have slipped and therefore the provisioning has increased,” Managing Director and CEO Kishor Piraji Kharat said.

He said with higher sanctions done in the second quarter, the bank is hopeful of having good growth in the loan book.

“It will help us reduce our percentages of stressed assets,” Kharat said.

Fresh slippages rose to Rs 1,373 crore, while it recovered Rs 118 crore and upgraded Rs 189 crore of loans.

The bank didn’t sell any bad loans to asset reconstruction firms in this fiscal so far.

Justifying the decision, Kharat said, “We’ve not done any sale to ARCs, but are working on it. Unless we get better price, we will not sell as our assets are backed by securities and that is the reason when we think about giving to an ARC we normally do not compromise for the lesser values.”

The bank rebalanced its portfolio, which yielded good results showing an increase of 5 per cent in retail advances at 32 per cent in Q2 as against 27 per cent previous year.

The share of corporate or wholesale advances dropped from 73 to 68 per cent. Total business (deposits and advances) rose to Rs 4,43,943 crore from Rs 4,33,063 crore.

Casa deposits increased to Rs 57,887 crore from Rs 52,433 crore, reflecting a growth of 10 per cent, while advances also increased 5 per cent to Rs 2,04,661 crore.

Capital adequacy ratio (without considering half yearly profits) stood at 11.66 per cent under Basel III norms.

The bank is planning to raise USD 500 million through green bonds by end if this fiscal, Kharat said.

When asked about the government plan to reduce stake in the bank and transform it in the similar lines of Axis Bank, he said there has been no formal communication so far.

“There is no official communication from the government to us so far as whether it is divestment or they want to reduce their stake,” he said.

Shares of the bank ended 0.24 per cent up at Rs 84.80 on BSE, which closed 0.14 per cent down.

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