IDBI Bank on Thursday reported a 75% year-on-year (y-o-y) jump in net profit to Rs 567 crore for the quarter ended September, driven by a reduction in employee costs and an improvement in net interest income (NII).
The bank’s NII, or the difference between interest earned and interest expended, rose 9.45% y-o-y to Rs 1,854 crore.
P Sitaram, chief financial officer, IDBI Bank, explained that the improvement in the bottom line was aided by certain accounting benefits.
“We have seen a reduction in the employee cost. In September 2020, because of the interest rate movement, we had to take an actuarial hit on retirement benefits. This year so far, the movement in interest rates has not given rise to any significant increase in retirement benefits over and above the March 2021 levels,” Sitaram said.
The private lender’s pre-provisioning operating profit rose 15% y-o-y to Rs 1,209 crore. The net interest margin (NIM), a key measure of profitability, stood at 3.02%, down 104 basis points (bps) sequentially.
The lender’s provisions rose 11.6% y-o-y to Rs 434 crore in Q2FY22. Asset-quality performance was a mixed bag as the gross non-performing asset (NPA) ratio improved to 20.92% in Q2FY22 from 21.48% in the previous quarter. The net NPA ratio rose to 1.62% in the September quarter from 1.56% in the June quarter. The provision coverage ratio (PCR) improved to 97.27% as on September 30, 2021, from 95.96% as on September 30, 2020.
Slippages amounted to Rs 1,541 crore, down from Rs 1,577 crore in Q1FY22. Recoveries and upgrades were to the tune of Rs 1,910 crore, up from Rs 1,596 crore in the June quarter. The slippage ratio for the year so far stands at 2.2% and the bank intends to contain it at around 3% for the full year.
The bank’s total deposits fell 0.26% y-o-y to Rs 2.23 lakh crore at the end of September 2021. The value of current account savings account (CASA) with the bank increased 13% y-o-y to Rs 1.22 lakh crore. The share of CASA in total deposits improved to 54.64% as on September 30, 2021, against 48.33% as on September 30, 2020.
Gross advances grew 0.41% y-o-y to Rs 1.64 lakh crore at the end of September 2021. Retail loans accounted for 63% of the total loan book, with the rest being corporate loans.
Shares of IDBI Bank ended at Rs 55.60 on the BSE on Thursday, down 2.03% from their previous close.
