The net profit during the nine months ended December 31, 1999, has dropped by 36.81 per cent to Rs 637 crore on an income from operations of Rs 5,718 crore, up by 4.15 per cent, an IDBI release said.

The gross profit during the third quater has slided by Rs 15.28 per cent to Rs 305 crore from Rs 360 crore estimated during the corresponding period of 1998-99. During the nine-month of the current year, the gross profit has dropped by 20.32 to Rs 969 crore from Rs 1,216 crore pegged during the corresponding period of the last year.

"A higher provisioning of Rs 308 crore made towards non-performing assets (NPAs) for the nine-month period, severe pressure on margins and continued high cost of borrowings were also responsible for the decline in profits," Gupta said. He added that the next quarter will also see an additional outgo of the remaining Rs 70 crore tax provision, which has come about on account of government clarification on tax on infrastructure lending.

"However, the performance of IDBI was comparatively better than that of other financial institutions in the country. While the sanctions during the quarter went up by 35 per cent to Rs 6,972 crore, disbursement moved up by 31 per cent to Rs 3686 crore," Gupta added.

The institution's income from operation during the third quater has gone up marginally by 3.53 per cent to Rs 1,933 crore while the other income has dropped by 33.33 per cent from Rs 63 crore to Rs 42 crore.

The interest expenses during the third quater of the year rose to Rs 1,604 crore from Rs 1,519 crore recorded during the same period of the previous year.

The institution's sanctions at Rs 6,972 crore and disbursements at Rs 3,686 crore during the quarter increased by 34.7 per cent and 31 per cent, respectively. During the nine-month period sanctions were higher by 12.1 per cent at Rs 20,367 crore (Rs 18,165 crore last year) and disbursements increased by 15.6 per cent to Rs 10,904 crore (Rs 9,431 crore).

Insight
poor show

The declining trend in earnings from IDBI seen right from the first quarter of 1998-99, has continued unabated into the third quarter of 1999-2000. The fall in profits has been tempered somewhat by the excessive tax provisions, but then the DFI has not provided for the mandatory provisions against standard assets, which will be made in the last quarter dragging down the earnings in that period as well. The DFI has not been able to fulfill its management's promise of increasing treasury and fee-based income. It's other income is down for the quarter by one third. All in all, a very poor performance from IDBI. The stock market, very rightfully, has had little or no interest in this stock.

Aaron Chaze