IDBI Bank net loss widens to Rs 3,800 crore as provisions weigh

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Published: August 15, 2019 3:06:06 AM

The lender’s pre-provisioning operating profit dropped 12% year-on-year (y-o-y) to Rs 951 crore, led by a rise in employee cost and a 10.5% y-o-y drop in total income.

The state-run bank had posted a loss of Rs 2,409.89 crore in the April-June quarter of 2018-19.The state-run bank had posted a loss of Rs 2,409.89 crore in the April-June quarter of 2018-19.

IDBI Bank on Wednesday reported widening of loss to Rs 3,801 crore for the April-June quarter, hurt by higher provisioning for bad loans. The state-run bank had posted a loss of Rs 2,409.89 crore in the April-June quarter of 2018-19.

The lender’s pre-provisioning operating profit dropped 12% year-on-year (y-o-y) to Rs 951 crore, led by a rise in employee cost and a 10.5% y-o-y drop in total income.

Net interest income (NII) fell 0.7% y-o-y to Rs 1,458 crore as a fall in interest expense was outweighed by a decrease in interest income. Net interest margin (NIM) fell to 2.13% in Q1FY20, as compared to 2.26% in Q4FY19. The lender made a massive provision of Rs 6,332 crore in the last quarter, up 21% from the corresponding quarter last year. Asset-quality performance was a mixed bag as the gross non-performing asset (NPA) ratio worsened to 29.12% in Q1FY20 against 27.47% in the previous quarter. Net NPA ratio improved to 8.02% in the June quarter, as compared to 10.11% in the March quarter. The provision coverage ratio (PCR) improved to 87.79% as on June 30, 2019 from 64.45% as on June 30, 2018. Recovery from NPAs was Rs 729 crore in Q1.

Slippages amounted to Rs 3,486 crore, of which about Rs 2,000 crore came from two power accounts owned by a Navratna company, which were downgraded to NPA on the Reserve Bank of India’s (RBI) instructions.

Total global deposits fell 4% y-o-y to Rs 2.31 lakh crore at the end of June 2019. The value of current account savings account (CASA) with the bank increased 17% to Rs 99,590 crore. The share of CASA in total deposits improved to 43.15% as on June 30, 2019 against 35.51% as on June 30, 2018. Gross advances fell 6% y-o-y to Rs 1.77 lakh crore in June 2019. Retail loans accounted for 52% of the total loan book, with the rest being comprised of corporate loans. Return on assets stood at -4.96% for Q1FY20, up from -6.16% in the previous quarter.

Rakesh Sharma, managing director and chief executive officer, IDBI Bank, detailed a timeline for exiting the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework. “In terms of capital, we have come under threshold 2 (of the PCA framework), but we will be able to raise about Rs 10,500 crore. As far as NPAs are concerned, we have come down to threshold 1,” he said.

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