Quarterly Results: IDBI Bank posts Q3 net profit of Rs 378 crore as NII grows

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January 28, 2021 7:51 PM

On a consolidated basis, its profit after tax stood at Rs 393.15 crore, compared to a loss of Rs 5,728.70 crore last year.

IDBI BankThe bank is targeting to improve net interest margin (NIM) to 3 per cent, return of assets (ROA) at above 0.60-0.70 and cost to income ratio to below 50 per cent.

Life Insurance Corporation -owned IDBI Bank reported a standalone net profit of Rs 378 crore for December quarter 2020-21 on the back of healthy growth in interest income.

The lender, which is under the Reserve Bank of India’s prompt corrective action (PCA) since May 2017, had reported a standalone net loss of Rs 5,763 crore in the year-ago quarter.

On a consolidated basis, its profit after tax stood at Rs 393.15 crore, compared to a loss of Rs 5,728.70 crore last year.

“The profit has increased to Rs 378 crore in the quarter. It has been contributed by growth in the other income and net interest income. Our operating profit grew by 32 per cent (quarter-on-quarter) and net interest margin has increased to 2.87 per cent,” bank’s managing director and CEO Rakesh Sharma told reporters.

Net interest income (NII) grew 18 per cent to Rs 1,810 crore as against Rs 1,532 crore in the same quarter of the previous fiscal.

Its net interest margin (NIM) improved by 60 basis points to 2.87 per cent as compared to 2.27 per cent in the year-ago period.

Gross NPA ratio declined to 23.52 per cent from 28.72 per cent in the third quarter of the previous fiscal. Net NPAs eased to 1.94 per cent as against 5.25 per cent.

Provision coverage ratio (including technical write-offs) improved to 97.08 per cent from 92.41 per cent.

Its provision declined 82 per cent to Rs 1,261 crore during the quarter from Rs 7,041 crore in the year-ago period.

The bank’s total COVID-19 related provision stood at Rs 1,145 crore as at end-December.

Sharma said the bank’s recovery during the quarter was around Rs 961 crore. He said there has been slow growth in recoveries from NCLT accounts and the bank has used other channels like one-time settlement, which has helped.

The lender is targeting a recovery of Rs 1,000-1,200 crore during the fourth quarter, he said.

Its one-time restructuring book stood at Rs 2,960 crore.

“Earlier, we had indicated restructuring to be in the range of 5-6 per cent of our total standard advances. But now I can say that the total restructuring will not exceed 2.5 per cent. We have already made provision for that,” he said.

The bank sold Rs 78 crore worth of NPAs to asset reconstruction companies.

Sharma said the bank expects to be out of PCA soon.

“We have complied with all the parameters. We hope to exit from PCA soon,” he said.

During the quarter, it raised equity capital of around Rs 1,435.18 crore by way of QIP. Its CRAR improved to 14.77 per cent as against 12.56 per cent in the same quarter of the previous fiscal.

Advances fell 7 per cent to Rs 1,59,663 crore and deposits grew marginally by 3 per cent to Rs 2,24,399 crore.

The lender has sold 23 per cent stake out of 48 per cent holding in its joint venture IDBI Federal Life Insurance Company (now Ageas

Federal Life Insurance Company). The post-sale holding in the joint venture is 25 per cent as on December 31, 2020.

The bank’s scrip closed at Rs 28.30, up 2.17 per cent, on BSE on Thursday.

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