IDBI Bank on Tuesday reported a net loss of Rs 197.84 crore for the September 2017 quarter, compared to a Rs 55.5-crore profit a year ago, owing to a manifold jump in provisions for bad assets.
IDBI Bank on Tuesday reported a net loss of Rs 197.84 crore for the September 2017 quarter, compared to a Rs 55.5-crore profit a year ago, owing to a manifold jump in provisions for bad assets. It also reported its highest ever gross non-performing asset (NPA) ratio at 24.98%. Provisions for NPAs stood at Rs 1,275.96 crore in the quarter, 39% higher than that in Q2 FY17 and total provisions were up 2.4 times year-on-year (y-o-y) at Rs 3,256.6 crore. However, the bank was profitable on an operating level with a pre-provisioning operating profit (PPOP) at Rs 2,798.23 crore, up 82% y-o-y. Net interest income (NII) — the difference between interest earned and interest expended — has risen 3.7% y-o-y to Rs 1,657.45 crore in Q2FY18. Non-interest income jumped 64% y-o-y to Rs 2,293 crore on the back of divestment of its stakes in Small Industries Development Bank of India (SIDBI) and Clearing Corporation of India (CCIL), which yielded capital gains of Rs 1,266.45 crore and Rs 70.96 crore, respectively. Net interest margin (NIM) — a key measure of profitability — has increased by 45 basis points (bps) sequentially to 2.17% in the same period. IDBI Bank also reported fresh slippages of Rs 3,381 crore and wrote off loans worth Rs 1,586 crore in Q2FY18.
It has a Rs 11,300-crore exposure to 19 accounts in the second list of accounts that the Reserve Bank of India (RBI) has asked banks to resolve by December or refer to the insolvency courts. IDBI Bank’s total advances fell 16% y-o-y to Rs 1.83 lakh crore and total deposits fell 9% y-o-y to Rs 2.41 lakh crore. Total capital adequacy ratio under Basel III norms stood at 11.98%, up from 11.64% a year ago. Reacting to the results, the IDBI Bank scrip on the BSE fell as much as 5.82% to Rs 61.45 on Tuesday and closed at Rs 62.70, down 3.91% from its previous close. Earlier this year, RBI had initiated prompt corrective action (PCA) against IDBI Bank, prompted by the bank’s high net NPAs and negative return on assets (RoA).
In Q2, the bank’s net NPA ratio stood at 16.06% while the RoA stood at -1.38% in FY17. IDBI Bank faces restrictions on distributing dividends and remitting profits. On August 9, the government, the largest shareholder in the bank, infused Rs 1,861 crore by way of preferential allotment of equity shares. Under the terms of PCA, the lender has also been stopped from expanding its branch network. It needs to maintain higher provisions and management compensation and directors’ fees are capped.