IDBI Bank on Tuesday reported a 53.5% (Y-o-Y) drop in its net profit to R55.5 crore for the second quarter because of marginally lower net interest income (NII) and a 90.3% jump in employee expense.
P Sitaram, executive director, attributed the jump to provisions made for employees that was necessitated by the drop in G-Sec yields. “Since a lot of the provisions that are set aside for retired employees, gratuity payments, etc are linked to the G-Sec yield, the rally in them in recent months required us to make higher provisions in the September quarter.”
Sequentially, the bank’s profit slumped 77% despite a 44.5% drop in provisions, largely because the Q1FY17 profit was buoyed by a tax writeback of R1,206.5 crore.
On the asset quality, IDBI Bank said R5,699 crore worth of loans slipped during the quarter, pushing up its gross non-performing assets to R30,134 crore or 13.05% of the total advances.
Its loan book grow by just 6.8% (y-o-y) for the reviewed quarter, about 300-400 bps lower than the growth witnessed by the banking industry as a whole.