Provisions remain high; net NPA ratio also picked up to 10.11% in Q4FY19.
IDBI Bank on Thursday posted a net loss of Rs 4,918 crore for the March quarter on the back of high provisions. However, the net loss of the bank narrowed from Rs 5,663 crore in the same quarter last year.
The public-sector lender’s pre-provisioning operating profit dropped 41% year-on-year (y-o-y) to Rs 1,396 crore led by the rise in employees cost and a 57% y-o-y drop in the other income.
Net interest income (NII) rose 76% y-o-y to Rs 1,609.27 crore as the interest expense fell significantly, though, there was just a slight increase in interest income. Net interest margin (NIM) improved to 2.26% in the Q4FY19 compared with 1.19% in the Q4FY18.
The lender made a massive provision of Rs 7,223.26 crore in the last quarter. However, it came down 33% from `10,773.3 crore in the corresponding quarter last year. Asset quality improved as gross non-performing asset (NPA) ratio improved to 27.47% in the Q4FY19 against 29.65% in the previous quarter and 27.95% in the Q4FY18.
Net NPA ratio also picked up to 10.11% in the Q4FY19 against 14.01% in the Q3FY19 and 16.69% a year ago. Provision coverage ratio (PCR) improved to 82.88% from 63.40% in the same quarter last year.
Recovery from NPAs was Rs 9,326 crore in FY19, including interest recovery of Rs 2,883 crore.
Deposits fell to Rs 2.27 lakh crore in FY19 from Rs 2.48 lakh crore in the previous year. CASA increased to Rs 96,730 crore in the March quarter against Rs 92,102 crore in the previous year. CASA ratio improved to 42.54% against 37.15% a year ago.
Advances fell to `1.46 lakh crore in FY19 from Rs 1.71 lakh crore in FY18. Retail loans accounted for 51% of the total loan book and the rest was filled by the corporate loans.
Return on assets stood at -6.16% for Q4FY19, a slight improvement from -6.68% last year but a decline from -5.19% in the previous quarter.
IDBI Bank managing director and chief executive officer Rakesh Sharma detailed a timeline for exiting the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework. By June 30, the bank’s net NPA will come down to under 9% and by September 30, it will drop to below 6%, he said. The bank will return to profitability by Q3 or Q4 of FY20.
“That way we will be compliant with all the parameters. As of now, we are compliant in terms of capital and leverage ratio. In terms of net NPA, we have come down from threshold 3 to threshold 2,” Sharma said, adding that IDBI Bank will represent to RBI to ease some conditions with respect to their ability to lend in light of the improvement in these parameters.
IDBI Bank expects to recover NPAs worth Rs 13,000 crore in FY20 and reduce slippages every consecutive quarter.