IDBI Bank back in black after 13 quarters, reports Rs 135 crore profit in Q4

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Published: May 31, 2020 6:00 AM

Breaking a chain of 13 consecutive loss-making quarters, Life Insurance Corporation (LIC)-owned IDBI Bank on Saturday reported a net profit of Rs 135 crore in the March quarter, despite providing Rs 247 crore on account of Covid-19.

The bank has provided moratorium to around 97% customers in the priority sector. In the structured retail assets segment, the bank has given 66% moratorium to its customers.The bank has provided moratorium to around 97% customers in the priority sector. In the structured retail assets segment, the bank has given 66% moratorium to its customers.

Breaking a chain of 13 consecutive loss-making quarters, Life Insurance Corporation (LIC)-owned IDBI Bank on Saturday reported a net profit of Rs 135 crore in the March quarter, despite providing Rs 247 crore on account of Covid-19.

The lender’s net interest income (NII) grew 46% year-on-year (y-o-y) to Rs 2,356 crore. Similarly, net interest margin (NIM) improved to 3.8% in the March quarter, showing y-o-y growth of 154 basis points (bps) and quarter-on-quarter (q-o-q) growth of 153 bps.

The bank has provided moratorium to around 97% customers in the priority sector. In the structured retail assets segment, the bank has given 66% moratorium to its customers.

Rakesh Sharma, managing director & chief executive officer, IDBI Bank said, “We were required to make provision of 5% in this quarter, but we have made 10% provisioning on account of Covid-19.”

The net provisions other than tax and contingencies in the March quarter stood at Rs 1,584 crore, almost three times in comparison to Rs 522 crore provided in December 2019. The provision coverage ratio (PCR) improved to 93.74% as on March 31, 2020, from 82.88% as on March 31, 2019, and 92.41% as on December 31, 2019. The bank claims to have declared highest PCR in the industry.

“The bank has achieved all prompt corrective action (PCA) parameters, except return on assets (RoAs) for the full year,” Sharma added. The capital adequacy ratio (CAR) of the bank stood at 13.31%, against regulatory requirement of 11.5%, he said.

RBI had kept the bank in PCA framework, under which the central bank puts partial restrictions on loan disbursements. The regulator had taken action after a massive asset quality deterioration, losses in the books and lower capital levels.

The asset quality of the bank showed improvement in the March quarter. The gross non-performing assets (NPAs) improved 119 bps to 27.53%, compared to 28.72% in the previous quarter. Similarly, net NPAs came down 106 bps to 4.19% in the March quarter, sequentially. “Our special mention accounts (SMAs) have come down substantially to Rs 2,466 crore as on May 21, 2020,” said Ajay Sharma, CFO, IDBI Bank.

The SMA book stood at Rs 7,894 crore till December 2019. The bank also said first time NPAs reduced to Rs 727 crore in March 2020 from Rs 1,781 crore in March 2019.

The share of current account savings account (CASA) in total deposits improved to 47.74% as on March 31, against 42.54% as on March 31, 2019. The share of retail portfolio in the advances increased to 56% in March this year, compared to 51% in the same quarter last year. The cost of deposit improved by 58 bps to 4.82% in March this year, compared to 5.4% in March 2019.

The bank also mentioned about benefit of synergies due to LIC. The insurance premium collection crossed `800 crore, netting to a fee income of Rs 40 crore.

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