IDBI Bank on Thursday reported a 25% year-on-year (y-o-y) increase in net profit to Rs 750.36 crore for the quarter ended June, driven by a 48% drop in provisions to Rs 959 crore.
The private lender’s pre-provisioning operating profit fell 28% y-o-y to Rs 2,052 crore. Rakesh Sharma, MD & CEO, IDBI Bank, said that the bank’s operational performance looked weak due to large recoveries made in two corporate accounts in the corresponding quarter a year ago.
In the quarter ended June 2021, IDBI Bank had made recoveries of 1,600 crore from non-performing assets (NPAs), of which 868 crore was from Kingfisher Airlines and Videocon. “That had gone to interest income and recovery from written-off accounts. As a result, our operating profit was higher. This year also, we have made Rs 1,136 crore of recovery, but these have mainly gone to reversal of provisions,” Sharma said.
Net interest income (NII), or the difference between interest earned and interest expended, fell 0.72% y-o-y to Rs 2,488 crore. The net interest margin (NIM), a key measure of profitability, was at 4.02%, up five basis points (bps) sequentially.
Gross advances grew 8.74% y-o-y to Rs 1.7 trillion at the end of June 2022. Retail loans accounted for 63% of the total loan book, with the rest being corporate loans. IDBI Bank has guided for a 10-12% loan growth in FY23.
The bank’s total deposits rose 1% y-o-y to Rs 2.25 trillion at the end of June 2022. The share of current accounts savings accounts (Casa) in total deposits improved to 55.65% as on June 30, 2022, from 52.43% as on June 30, 2021.
IDBI Bank has been continuously reducing bulk deposits as a matter of strategy to reduce the cost of deposits, Sharma said. “Going forward when we start growing our advances, not only will we grow the Casa deposits but we may grow the bulk deposits also, depending on the requirement,” he added.
Asset quality improved, with the gross NPA ratio falling to 19.9% in Q1FY23 from 20.16% in the previous quarter. The net NPA ratio fell to 1.25% in the June quarter from 1.36% in the March quarter.
Slippages amounted to Rs 1,216 crore, up from Rs 908 crore in Q4FY22. The bank settled loans worth Rs 721 crore, made upgrades worth Rs 171 crore and wrote off loans worth `531 crore in Q1FY23.