IDBI Bank posts 4-fold jump in profit to Rs 603 cr in Q1

By: |
Updated: July 28, 2021 8:28 PM

Provision Coverage Ratio (including Technical Write-Offs) improved to 97.42 per cent as on June 30, 2021 from 94.71 per cent as on June 30, 2020.

IDBI Bank is progressing on realizing business synergies with LIC. For the quarter, the bank has done a premium collection of Rs 32 crore for LIC and earned a fee income of Rs 5 crore, it said.

LIC-owned IDBI Bank on Wednesday reported a four-fold jump in its standalone profit after tax to Rs 603 crore in the June quarter, aided by higher growth in net interest income (NII) and improvement in asset quality.

The lender had reported a standalone profit after tax of Rs 144 crore in the corresponding quarter of the previous fiscal.

“The performance of the bank has been improving. We have been quite proactive in making provisions. Going forward, I am quite hopeful that the same trend will continue,” the bank’s Managing Director and CEO Rakesh Sharma said.

Net interest income grew by 41 per cent to Rs 2,506 crore from Rs 1,772 crore in the year-ago period.

The bank made an aggregate recovery of Rs 733 crore from the Kingfisher account, the bank’s deputy managing director Samuel Joseph Jebaraj said.

He said part of the recovery from Kingfisher pertains to interest accumulated over the years and another is towards the principal.

After accounting for the principal recovery (Rs 278 crore) in the other income, the remaining part which is the interest portion goes to interest income (Rs 455 crore), he said.

Net interest margin (NIM) improved by 125 basis points to 4.06 per cent from 2.81 per cent during the first quarter of FY21.

Gross NPA ratio improved to 22.71 per cent as against 26.81 per cent and net NPA at 1.67 per cent as against 3.55 per cent.

Sharma said the bank will bring the gross NPA level to below 15 per cent in the current financial year.

“We will be able to reduce our GNPA ratio by 4-5 per cent through growth in the advances (denominator). Once the National Asset Reconstruction Company Ltd (NARCL) comes, some assets will be transferred and that would further reduce the gross NPA by another 5-6%. By year-end, both NARCL and the advances growth will help in the reduction of gross NPAs to 15 per cent,” he said.

The bank is looking to transfer about Rs 11,000-12,000 crore of advances to the NARCL. Of that live accounts will be around Rs 7,000-8,000 crore and the rest have already been written off, Sharma said.

Provision coverage ratio (including technical write-offs) improved to 97.42 per cent from 94.71 per cent. Fresh slippages during the quarter stood at Rs 1,332 crore.

Sharma expects slippages to be under control from Q3 and Q4 onwards due to an improvement in collection efficiency.

“Going forward, with Covid situation improving, I hope collection efficiency ratio will improve to 95 or 96 per cent,” he said.

During the quarter, the bank upgraded Rs 1,009 crore of bad loans.  Capital to risky asset ratio (CRAR) improved to 16.23 per cent as of June 30, 2021 as against 13.37 per cent as of June 30, 2020.

The bank expects credit growth of 8-10 per cent during the current financial year.

“We have special expertise in doing corporate advances and we will continue to do that and more focus will be on mid-corporate advances. So we will grow by 8-10 per cent in FY22,” Sharma said.

In the current financial year, the bank is planning to sell stake in National Securities Depository Limited (NSDL) and in Asset Reconstruction Co (India) (ARCIL).

“We are holding 26 per cent stake in NSDL. As per their rule, we can hold 15 per cent and so we will be divesting 11 per cent of our stake,” he said.

In ARCIL, the bank has around 19 per cent share. Sharma said with since the bank will buy 5 per cent stake in NARCL, it will dilute its stake in ARCIL.

The bank’s shares closed at Rs 37.70 apiece, down 0.79 per cent on BSE.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Bank deposits rise 12 pc in FY21 on higher CASA growth: RBI data
2Bank credit grows by 6.7 pc; deposits by 9.32 pc
3Fresh troubles surface for Dhanlaxmi Bank