The IDBI board met in Mumbai on Monday to approve the unaudited results.

In the first half of the current fiscal, IDBI had posted a Rs 705-crore net profit out of which the first quarter accounted for Rs 361 crore. In other words, IDBI's quarterly net profits have been progressively declining in fiscal 1999 (April-June: Rs 361 crore, July-September: 344 crore; October-December: Rs 303 crore).

If the trend continues, IDBI may end up posting a negative growth in its net profit during 1998-99. In the previous year, the term-lending institution had posted a net profit of Rs 1,501crore. IDBI officials were not available for comment.

The institution's total income for the third quarter of the current fiscal amounted to Rs 1,930 crore while its total expenditure stood at Rs 1,570 crore for the same period. Total expenditure in April-December was to the tune of Rs 4,404 crore. Gross profit -- after interest but before depreciation and tax -- amounted to Rs 1,249 crore. After making provision for depreciation (Rs 51 crore) and tax (Rs 6 crore), the net profit for the period stood at Rs 1,008 crore.

Although the institution's overall sanctions during April-December 1998 registered a 25.7 per cent growth at Rs 19,924 crore, up from Rs 15,856 crore in the corresponding period of 1997, disbursements grew at a snail's pace. In the first three quarters, disbursements grew at Rs 9,346 crore, up from Rs 9,253 crore in the corresponding period of the previous year. In fiscal 1998, IDBI had posted a massive 32.6 per cent growth in disbursements (Rs 15,165 crore).

Analysts have attributedIDBI's "cautious approach in the face of rising non-performing assets" to the tardy growth in disbursements. The IDBI release on Monday did not mention the April-December NPA figures. In March 1999, IDBI's sub-standard assets were pegged at 6.99 per cent and doubtful assets at 3.15 per cent.

Industry-wise, the share of electricity generation in overall assistance approved was the highest at 36.8 per cent, followed by chemicals and chemical products (14.3 per cent), textiles (6.4 per cent) and iron and steel (4.5 per cent). The sharp increase in assistance to electricity generation was owing to 16 large projects which were extended assistance during April-December 1998.

The total rupee resources raised by way of borrowings during April-December 1998 aggregated Rs 12,620 crore. The second tranche of Public Issuance of Bonds (Flexibond -- Series 5) during the current financial year mobilised Rs 1,510 crore compared with the target of Rs 750 crore, representing an improvement over the Rs 1,343 crore in thefirst trance during September-October 1998.

InsightDeclining profits cause for worry: The pattern of earnings is a strange development for IDBI. Quarter on quarter there is a declining trend, which is not a positive development considering that the third quarter is a busy season for FIs. The proportion of contribution to net profit has been higher in the previous two quarters.

A noteworthy development in IDBI's results is the fact that sanctions are up by one fourth but disbursals are up by only one hundreth. This indicates the poor potential for growth in income in subsequent periods. A cursory glance reveals that IDBI's interest spreads are under pressure compared with the first half. During the last quarter, there has been a steep increase in high-cost mobilisations, which will continue to keep spreads under pressure.

Further, in keeping with this particular FIs trend of announcing results, the relevant figures from the corresponding period in the previous year are not reported. Thusrendering a meaningful analysis of the results impossible.